Putting the €uro into €urope

By CATHRIN SCHAER

So there you are in beautiful Venice. You decide to try a slice of genuine Italian pizza from a genuine Venetian canalside cafe. A quick calculation of exchange rates and you decide it's affordable.

It's only when you get back to your hotel that you realise you just consumed $70 worth of bread covered in cheese and tomato and only tipped that lovely waiter 20c.

Ah, the trials and tribulations of the European currencies that we're not so familiar with. While New Zealanders might know what a pound is worth in our own dollars and cents, the drachmas, lire and markka in their thousands and hundreds of thousands are a little more difficult to translate.

But the good news for border-crossing travellers is that the confusion is about to disappear. Next year the euro - aka €, the new European unit of currency - arrives. Which means that once you get a handle on the only exchange rate that matters, it will be much easier to traverse the continent.

For many Europeans the introduction of the euro - which replaces the national currencies of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Luxembourg, the Netherlands, Italy, Portugal and Spain - has not been without controversy.

On one hand, it symbolises a new unified Europe aimed at improving trade and stability. But it also means the loss of some national sovereignty. For that and other reasons Britain, Denmark and Sweden have declined to enter the new monetary union.

No doubt those pros and cons will seem even starker when cash euros enter circulation in January and make the monetary union a visible part of everyday life.

However, for New Zealanders travelling in the euro zone, the nuances will be less noticeable. What will be obvious is the convenience the euro should bring.

Apart from removing the need to carry a calculator with you, it's also going to mean an end to the queues and exchange fees at each European border - and that kilogram or so worth of leftover coins at the end of a trip.

"The euro will certainly make things a lot easier for our customers, especially if they are travelling through multiple countries," agrees Catherine Gerbic, national sales manager for Trafalgar Tours, who run seven to 31-day coach tours through Europe.

At the moment Trafalgar Tours make what they call a "currency package" available to clients leaving from London. This contains just enough money for travellers doing the multi-country tours to get by on.

But already they recommend that if their clients buy anything with a credit card, they ask that the transaction be made in euros. At present the rate is favourable, Gerbic explains, and you'll find price transparency for goods and services - such as that overpriced Venetian pizza.

There will also be relief from the fees involved in changing money. "Any time you exchange, it costs you money," says Chris Matthews, spokesman for the European Commission in New York. "There's an old analogy that if you started in one EU country with $100 you'd end up with something like $50 by the time you got through all of them, even if you didn't buy a thing."

One of the only potential disadvantages he sees for travellers is the likelihood of a little confusion during the initial weeks of the changeover, when euros will temporarily change hands alongside national currencies.

For instance, a tourist breaking a €100 note at a shop or restaurant may receive change in the national currency. "As far as tourism goes, there could be a two-month transition where there could be confusion," says Matthews. "But it'll be a very quick bang as opposed to a prolonged one."

Stuart Cordelle, national retail manager for Travelex and Thomas Cook in New Zealand, two of the biggest foreign currency providers in the world, says: "The only problem I can see is that people might have trouble converting the euro in their heads at first. Because most people travel with US dollars or British pounds now, they know that $NZ3 is roughy equal £1 or that two and a half of our dollars equal one American dollar. But they're not quite as sure about the euro. However, I'm sure that once the transition is made, that will all change quickly." And what of New Zealand's own relatively weak currency? Could the euro affect what our holiday dollars can buy, turning that two-week excursion into an unaffordable luxury?

Cordelle calms frightened budget travellers everywhere, saying that he thinks this is highly unlikely. With one large economic union there is some small possibility that poorer states like Turkey, Portugal or those in the Eastern bloc will find themselves economically stronger. But when it is introduced the euro rate will already have been pegged to the various European currencies it is replacing.

"And," Cordelle says, "I think you will still get value for money in those places that have always provided value for money. If you buy a piece of cheese or a coffee in Portugal it's still going to cost you a lot less than if you bought it in Paris."

Another popular theory is that the introduction of the euro could make everything less expensive. Because price comparisons between countries (particularly around border areas) will be easier to make, things could become more competitive. Prices would be forced down since huge differences would be unsustainable.

"Basically the introduction of the euro is not going to have a major effect on New Zealand travellers," Cordelle says. "The main thing that it's going to do is make things more convenient. Travelling in Europe, especially if you're crossing a lot of borders, is just going to be that little bit easier."

€1 =

6.55957 francs in France

1.95583 deutschmarks in Germany

200.482 escudos in Portugal


Using the exchange rate of June 25, 2001:

0.85706 dollars in the US

0.6072 pounds in Britain

2.07169 dollars in New Zealand

Euro time line:

January 1, 1999: Conversion rates between old national currencies and euro are fixed. Transition to the euro begins, and euros can be used for any non-cash transaction, but are not compulsory.

January 1, 2002: Euro notes and coins to be introduced and euros to be used for all non-cash transactions.

February 28, 2002: Old notes and coins to be withdrawn.

Euro notes:

* Go on, say "Baffling Pigs." That's the mnemonic you need for the 12 European Union member countries using the euro: Belgium, Austria, France, Finland, Luxembourg, Ireland, the Netherlands, Germany, Portugal, Italy, Greece and Spain.

* For the time being the euro will not be used in the other three EU countries: Britain, Denmark and Sweden. And, of course, euros will not be legal tender in the non-EU countries such as Switzerland, Norway and the Czech Republic.

* If travelling in the euro countries during the transition (end of this year and early next) make sure you know when the currency of the country you are in is no longer legal tender. As the euro is phased in over two months, most nations have chosen February 28 as the date from which local currency is no longer acceptable. But there are some differences - for instance, in Germany the date is December 31 this year, in Ireland it's early February.

* Research by Dun and Bradshaw indicates that 10 per cent of businesses may not be ready for the changeover. Mostly these will be small or medium-sized businesses.

* There will be eight new coins. Each will show a map of the European Union and all will include the 12 stars that symbolise the EU. Although they'll be accepted in every euro country, the other side of the coin will have national variations. The seven euro notes will be of various sizes and colours and, unlike the coins, will all be the same.