Euro notes and coins

Small businesses in the eurozone will be cascaded within 15 months by 56 billion new coins and 13 billion banknotes yet most admit they are entirely unprepared. Need they be? Tim Jones reports.

When they met in the palatial surroundings of Louis XIV's Versailles palace at the weekend, the European Union's 30 finance ministers and central bankers had an act of convenience for small businesses in their gift.

The Belgian authorities had pressed their EU colleagues and a reluctant European Central Bank to "front-load" the issue of the eurozone's new banknotes and coins. In English, this would have meant that the new physical currency would be released to banks and business in advance of the 1 January 2002 deadline to get them used to it.

The plan was rejected, not least because the ECB hated the idea. Packs of coins will be released early and displayed in post offices but nothing like this will be done for notes. This would have caused confusion, said French Finance Minister Laurent Fabius.

There may be confusion enough. There are 15 different denominations of notes and coins ranging from 1 cent to 500 euro. Values up to two euro will be minted as coins and anything above five euro as paper. This gives a grand total of seven different bank notes and eight coins.

For at least six weeks from 1 January onwards, there will be two series of notes and coins in circulation in 12 European countries. Banks and retailers will have to count and sort both of them, so requiring new equipment or re-construction of existing machines. Cash registers as well as coin- and note-handling machines will have to be able to handle and add both currencies at the same time, while the customer will have to be paid in euro only.

Coin use will increase because of the high value of the pieces. During this period of dual circulation, national coins and bank notes will gradually be withdrawn from circulation and exchanged for euro. This will be done automatically when withdrawing cash from bank or post office accounts either from a teller or ATMs, when exchanging notes and coins in the bank or when making a retail transaction. Banks will charge for a cash-exchange transaction to cover costs arising from the cash-handling process.

The huge amount of vending and coin-collecting machines out there rely primarily on the dimensions of the coins and on electrical parameters. Many coin sorters and counters will only be able to accept one set but some can separate and count the two coin sets simultaneously.

German bank WestLB has warned all its business clients that all suppliers of cash handling systems will be overloaded with work as we get closer to January 1, 2002, so think about this now.

The evidence suggests that small businesses are doing anything but preparing. If you want to be sure of emptying a room, organise an information seminar on the euro, a business leader told French paper Le Journal de Dimanche.