Francs for the memories

By MARK FRYER

If your Christmas plans include a trip to Europe, this year there's something special on offer besides all the usual sights.

It's the chance to be in on the end of an era, and the birth of a new currency.

Yes, it's goodbye to the franc, the mark, drachma, peseta, lira and many of the other currencies which now confront visitors to Europe.

In a few weeks they will disappear, replaced by the new euro.

While a little of the mystery of travel will vanish with them, the changeover promises a much simpler life for visitors to Europe.

The witching hour is midnight, December 31, when a dozen members of the European Union switch to the euro - a change which affects 300 million people.

The currency has existed in abstract form since 1999, and is already used for cheque and credit card transactions.

The next step is to make the move from abstract to physical, by abandoning the old currencies and using the new euro notes and coins instead.

From the beginning of the new year you will have the choice of paying with the old notes and coins ("legacy currencies" in European Union jargon) or with euros, but traders are meant to give change only in euros. Many of Europe's 200,000 or so automatic teller machines are also meant to begin dispensing nothing but euros from the stroke of New Year's Eve.

More than 14.5 billion euro notes and 50 billion coins - 239,000 tonnes of them - have been produced for e-day and distributed across the continent under heavy security.

The switch takes place simultaneously in a dozen countries (see "Euro facts"). Britain, however, is sticking with the pound for now, and European Union members Denmark and Sweden will also keep their own currencies.

So will other European nations that don't belong to the EU, such as Switzerland, Norway and the Czech Republic.

However, travellers will find they can also use the new currency in some places outside the official euro zone; several large UK-based retail chains have already said they will accept the new notes and coins, including Marks & Spencer, Virgin, Selfridges and Dixons.

Smaller nations such as Andorra and Monaco will also adopt the new currency.

For travellers, the big benefit will be fewer currency conversions.

Instead of having to change currency every time you visit a different country, and get familiar with a new set of coins and notes, you will be able to use the one currency throughout much of Europe - from Finland in the north to Italy in the south.

Things won't be quite so neat for many New Zealand travellers, who will have to carry pounds as well as euros, but the changeover will still cut the amount of currency changing needed.

The switch will also make it much easier to compare prices throughout Europe, without having to indulge in complex mental gymnastics.

Quickly now, what's cheaper, a cup of coffee that costs 2 marks in Berlin or one that sets you back 15 francs in Paris? (answer: the German coffee is just over 1 euro, while the French cup costs 2.3 euros).

Not that the introduction of a new currency will suddenly make prices the same right across Europe. That cup of coffee will still cost more on the Champs Elysee or the Kurfurstendamm than it does in a back street in Portugal, but having one currency will make those sorts of regional differences much more apparent than they are now.

The new euro notes will come in seven denominations: five, 10, 20, 50, 100, 200 and 500 euros.

Each euro is divided into 100 cents, with coins in denominations of one, two, five, 10, 20 and 50 cents, as well as one and two euros. The symbol for the new currency is a stylised "e" - like this: €.

The notes are all the same, regardless of where they were printed. The designs on the coins differ from country to country, but all countries' coins will be accepted throughout the euro zone.

And, in case you were wondering, the official plural of "euro" is "euros" everywhere except Italy, where it's "euri".

Right now, one New Zealand dollar will get you about 0.47 euros or, to put it the other way round, one euro will cost you about $2.13.

While the euro promises to make life simpler in the long term, there are a few short-term traps for travellers.

One is that the old currencies will be legal tender for a limited time - generally up to the end of February but sooner in some countries (see "euro facts").

After that date shops, hotels, restaurants and all the other places you spend money in will no longer be obliged to accept the old notes and coins.

Commercial banks will continue to change them into euros for a few months after February 28, and national central banks will do so for some years - the exact periods vary from country to country.

So, if you're heading to Europe, where do you get hold of the new currency? You can't, not yet.

Even within Europe, fear of forgeries means the notes will not be released to the public before January 1. Some small change is expected to be available in Europe by the middle of this month, but it can't be used until the new year.

In this country, the Travelex group - which includes Thomas Cook - hopes to have euros available at Wellington Airport for departures on January 1, and at other branches a few days later.

Some banks are also hoping to have euros at the start of the new year, while others will not have the currency available until mid-January.

For travellers whose European trip starts before the currency is available here, the simplest answer is to take a mix of the old currency and euro travellers cheques, which can be changed for the old notes and coins before January 1 and for euros after that.

Making change will be another trap, not helped by the fact that many European merchants will not see their first real euro until January 1. If you pay in lira, for example, it's going to be difficult to know if you've been given the correct change in euros.

There's no magic answer to that one, beyond staying alert. Travelex suggests travellers may want to keep the old and new currencies separate.

In theory, merchants are meant to give change in euros after January 1 but in real life this may not always be the case.

Remember that the larger euro notes are worth a lot of money - more than $1000 in the case of the 500 euro note - so it will pay to familiarise yourself with the notes to avoid making a costly mistake.

It would also be a good idea to bring home as little old currency as possible.

And if you have any marks, francs, lira or other old currencies left over from a past trip, now would be a good time to think about selling them.

While they will be exchangeable in their home countries for many years, it will be a different story if you try to sell them in NZ.

Travelex says it will not buy any of the old euro-zone currencies after the new year, and is encouraging people to convert them now, by offering to do so without charging the usual commission until December 31.

How long the old currencies will remain exchangeable depends on who you ask. The National Bank, for example, will buy marks up to the end of next month, and other currencies until late March, while the ANZ plans to buy back euro-zone currencies until the end of February.

Other banks have other cutoff dates but, whatever the exact answer, time is limited.

Euro facts

Who's changing?

Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

How long can old currencies be used?

February 28 at the latest, but earlier in Ireland (February 9), France (February 17) and the Netherlands (January 28).

After that date they can still be converted at banks in their home countries.

How much is a euro worth?

40.34 Belgian franc

1.95 Deutsche Mark

340.75 Greek drachma

166.39 Spanish peseta

6.56 French franc

0.79 Irish punt

1936.27 Italian lira

40.34 Luxembourg franc

2.20 Dutch guilder

13.76 Austrian schilling

200.48 Portuguese escudo

5.95 Finnish markka


* Contact Personal Finance Editor Mark Fryer at: Business Herald, PO Box 32, Auckland. Phone: (09) 373-6400 ext 8833. Fax: (09) 373-6423; e-mail: mark_fryer@herald.co.nz.