E-Day is Coming ?
Dispelling the Myths About the Euro
By Renee Frappier
Despite a generous three-year transitional phase since the introduction of the Euro (EUR) on Jan. 1, 1999, many U.S. companies are in the dark about the effects the Euro changeover will have on the way they conduct business in Europe. The date of the changeover is Jan. 1, 2002 and it marks the end of the transitional phase of the Euro. Consumers will finally be able to carry and spend Euro cash. The banks will begin to withdraw legacy currency cash, and all bank accounts in the legacy currency of the 12 member states will be converted to Euro. In addition, companies will begin quoting prices in Euro rather than in the legacy currencies, or in the dual Euro/legacy currency prices that have already become familiar to many European consumers.
The end of the Euro transition phase has been ominously referred to as "E-Day" and "The End" because companies that maintain legacy currency accounting systems will have to be ready for the change. In addition, price disparities between Eurozone countries will quickly become evident and demands for unified pricing will increase. As with almost all challenges, however, there are opportunities that can help companies succeed in their international business goals. For example, as the Euro's relationship to each legacy currency is at a fixed rate, it is already possible to standardize pricing for Eurozone countries. There are attractive benefits to standard pricing across 12 countries, including lower production costs for same-language mailings in several nations (e.g. France, Belgium, Luxembourg). The Euro also could reduce the time and effort spent on reconciling foreign currency accounts and exchange risks.
Nine Tips for a Smooth Transition
Here are a few suggestions to help the changeover go smoothly for your international company.