IP/02/1920

Brussels, 19 December 2002

One year of euro banknotes and coins

Almost one year after the introduction of banknotes and coins, the euro has found its place in the daily life of Europe's citizens. The majority of Europeans feel happy with the euro and have no problems handling euro banknotes and coins. According to Economic and Monetary Affairs Commissioner Pedro Solbes "the successful euro changeover marked the beginning of a new era for Europe, an era when Europeans will achieve more together. Our main priority now is to modernise our economies in order to build a more prosperous Union for all our citizens." The euro is increasingly used as a means of payment in many places outside the euro area, particularly in big cities and in tourist areas. Many shopkeepers still use the dual display of prices. While being helpful for many citizens in the course of 2002, the dual display of prices may also have delayed the "psychological" euro changeover, which is underway but far from complete. Most citizens still calculate in their old national currency, especially while making big purchases. The Commission, in agreement with Eurocommerce, therefore recommends the retail sector to gradually phase out the dual display of prices and to discontinue this practice completely by 30 June 2003 at the latest.

Health and Consumer Protection Commissioner David Byrne said "In general, consumers have coped well with the new currency. We are all now familiar with the euro notes and coins in our pockets. After a year we are getting close to a full understanding of prices in euro. However, problems remain. Where necessary, we should make a last effort to make the euro in our heads as real as the once in our pockets".

The results of the November Eurobarometer provide some fresh information on the success of the euro changeover. There are five times more people indicating that they do not have any problems compared to those who indicate they still have some difficulties. The large majority of people quickly got used to the euro cash: 92.8% find it easy to handle banknotes and more than two thirds (68.8%) have no problems handling the euro coins. The vast majority of Europeans believe that the number of existing denominations for banknotes (83.7%) and coins (53.5%) is just right. Interestingly, when asked whether they would like to have EUR 1 banknotes 76% of citizens replied negatively (72% for EUR 2 banknotes).

Citizens are now well acquainted with the coins from other euro area countries. Especially in regions along the borders, in big cities and in tourist areas, a rising share of the coins in circulation are of 'foreign' origin. The different national faces of the coins are clearly a source of interest and 92.6% of the respondents confirm that they have no difficulties with the variety of coins. Many citizens have actually started to collect them. The interest of coin collectors was also directed towards the 80 different euro collector coins that were issued during 2002 by different Member States, and which are not destined for regular payment purposes.

The introduction of the euro banknotes and coins strengthens the integration of markets in the EU. The creation of a single currency has not only eliminated exchange rate risk and transaction costs it has also abolished a psychological barrier to cross-border trade, since price transparency facilitates comparisons. Since the introduction of the euro banknotes and coins, 12% of European consumers are more interested in buying goods in another EU country. Moreover, on average 32% of businesses in the EU-15 indicate that after the introduction of euro banknotes and coins they are more interested in selling their goods abroad.

The introduction of euro banknotes and coins had a clear impact on the use of the euro outside the euro area, not only in Europe but also in other parts of the world. Among others, the behaviour of European travellers favours this development: 53% of them say they take euro cash with them when leaving the euro area, as opposed to only 16% taking US-Dollars. It appears that payment with euro cash is sometimes accepted in the three Member States outside the euro area (DK, S, and UK) as well as in the 12 accession countries, although this practice is usually confined to the capitals and to tourist areas. Some shopkeepers display prices in euro. On the other continents, the introduction of euro notes and coins also had some impact, although on a more limited scale. Apart from the French overseas departments, which are geographically located outside Europe but form part of the EU, and where the euro replaced the French Franc, the euro is also accepted as a means of payment in the tourist areas of some American, Asian and African countries, sometimes in combination with the display of prices in euro.

In most countries, citizens linked the euro changeover to significant increases in prices. In practice, statistical analysis carried out by Eurostat at the end of the first month, first quarter and after six months (STAT/84/2002) of this year shows that price increases that could have been linked to the euro changeover raised inflation by a maximum of 0.2%. But there is an unusually high gap this year between perceived and measured inflation, which stems from the fact that more significant price increases were observed for certain frequently bought goods and services, which are more relevant for the formation of consumers' perceptions.

The recent Eurobarometer survey confirms that the "psychological" euro changeover of Europeans is underway but far from complete: 42.2% of consumers already calculate mainly in euro, but this percentage drops to 12.5% when large purchases are being made (e.g. a house or a car), as most people continue to calculate in national currencies for such big transactions. Retailers are still using the dual display of prices as many consumers, particularly those who are still calculating in national currency appreciate it. While a small majority (50.6%) of consumers no longer wants shopkeepers to display prices in old and new currency, 47.2% still prefer the dual display of prices. At the same time, it should be recognised that a continued dual display of prices inevitably delays the "psychological" changeover to the euro and even risks becoming counterproductive for a smooth transition. In agreement with Eurocommerce, the Commission therefore recommends to the retail sector to gradually phase out the dual display and discontinue this practice completely by 30 June 2003 at the latest, while informing customers well in advance of this change. The same approach is recommended in other sectors where prices and amounts are still being displayed in national currency and in euro. This is, for instance, the case on the invoices of certain companies and on the account statements provided by banks to their customers.

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