ECONOMY

Public still needs to be educated on the euro

In just over 75 days, the euro, our money, will be in our pockets, European Central Bank president Wim Duisenberg reminded his audience yesterday, at the Euro Information Conference organized by the Bank of Greece. The euro is already Greece’s currency. It was adopted when Greece joined the euro area on January 1, 2001. But for the vast majority of citizens, this will only become a reality when they see the new coins and banknotes and feel them in their pockets. This time is approaching fast and the transitional period, when both currencies will coexist, will last for only two months. The conference, the last of its kind in euro area countries, is part of an awareness campaign aimed at familiarizing the Greek public to the new currency. But as Bank of Greece governor Lucas Papademos conceded, the euro remains a virtual currency for the citizens, and many enterprises have not adapted their accounting systems and software to it. The Bank of Greece will do its part to educate the public through television spots, special conversion cards (of which one million will be distributed), and, for children, a board game and a comic strip, Eurocles. The Bank of Greece began delivering euro banknotes and coins to commercial banks last month. Next month, it will also deliver banknotes and coins to the retail sector. The central bank will also have to withdraw the old drachmas. At the moment, Papademos said, there are 650 million banknotes and 7,000 tons of coins circulating, worth a total of 3 trillion drachmas. At 6.4 percent of the gross domestic product, this is above the euro area average, because Greeks use more cash in their transactions. However, Spaniards use cash even more, and the Germans are not far behind. We are thus expected to encounter no specific problems in the introduction of the euro, Papademos said. National Economy and Finance Minister Yiannos Papantoniou described the introduction of the euro as one significant step in the integration of Europe, a position echoed by Duisenberg, who said that Europeans will now feel more at home in all of Europe. However, Papantoniou added, as the time to introduce the currency approaches, citizens are becoming more afraid about price gouging. To counteract those fears, agreements have been concluded with producers and retailers not to increase their prices during the transition period. Conversion rates will be strictly observed and numbers rounded downward, Papantoniou said. Duisenberg also addressed the subject of interest rate cuts and defended his decision to cut rates prudently, in contrast to his colleague, Federal Reserve Chairman Alan Greenspan. When I was participating in a similar event in Finland, a month ago, Alan Greenspan called me midway through my speech to announce he was about to cut the main intervention rate. Don’t worry, there will be no surprise today, he said. He reminded his critics, who have found him too prudent, that keeping control of inflation was, is, and will remain our main concern.