INDEPTH: THE EURO
Canadians and the euro
Amy Olmstead & Gary Graves | Dec. 2001
Canadians travelling in Europe
Canadians travelling to Europe will immediately notice the benefits of the new currency, thanks to fewer currency transactions.
"The euro is key to simplifying travel for consumers," says Mike Ewing, general manager for American Express Travellers Cheques Canada. "It will also lead to cost savings – a basic currency exchange cost is $5.00." Another benefit for travellers is easier comparisons of the price of travel, accommodations and goods in different countries.
Governments, banks and other financial institutions have been preparing European merchants for the changeover for several years. Many merchants are already pricing their goods in euros as well as in the national currencies. In all, while there might be some confusion in the Euro Zone in the first few days after January 1, the benefits to travellers outweigh any short-term inconvenience.
Here are a few tips that should make things easier when travelling
Travellers cheques
Long the recommended way to carry money, travellers cheques will be more convenient with the changeover on January 1. Euro-denominated travellers cheques are already available, replacing cheques denominated in the 12 national currencies. American Express has issued only euro-denominated travellers cheques for the Euro Zone since September and there have been no reported problems.
Even when travelling in Britain or other countries outside the Euro Zone, euro-denominated travellers cheques will be accepted by merchants. And they're easy to cash into pounds or other national currencies. But if you're only travelling outside the Euro Zone, it may be easier to take travellers cheques in the local currency.
Cash
If you're travelling in the Euro Zone before January 1, you'll need some cash in the old currencies. You can continue to use the old currencies fairly easily for a couple of weeks after the changeover.
Starting on January 1, you are supposed to be able to use euros in all Euro Zone countries. There is a transition period when both currencies are in circulation but if you use old currencies, you'll receive change in euros.
The old currencies start to expire as legal tender as early as January 1 in Germany and as late as February 28 in countries such as Belgium and Italy. The goal is to have most cash transactions conducted in euros by January 15.
If you'll be in Europe in early January, some say it might be useful to have some old currency on hand. There is a concern that some merchants may not be immediately prepared, but Ewing at American Express says travellers should be fine with just the euro.
Credit Cards
Credit card statements already itemize goods that are purchased in the Euro Zone in euros, which are then converted to Canadian dollars. You won't notice a change there.
ATMs
The January 1 changeover date means automated teller machines in the Euro Zone will begin dispensing just
euros as of the New Year.
St. Pierre and Miquelon
Located south of Newfoundland and Labrador, St. Pierre and Miquelon is a tiny Euro Zone nestled in Canada. It's a self-governing territorial collectivity of France and its population of about 6,600 will be switching to the euro on January 1. Travellers will have to as well.
Canadians at home
Even if you're not travelling to Europe, the changeover to the euro may affect you. Canadian banks have been preparing for this for a year according to the Canadian Bankers Association, and they say they're ready.
Here are some tips for making sure you're not left with worthless currency:
Cash
If you have French francs or any other old currencies at home, it's best to get them converted as soon as possible. Before January 1, you can convert them to Canadian dollars at banks or exchange services. You can also convert them to euro-denominated travellers cheques, if you're planning to travel during the year.
You can convert cash to euros at banks from January 1 until February 28th. Not all branches will have the new currency on hand right away, so call your local branch to find out. After February 28, exchange is still possible, but time consuming. It will have to be done through the European country's central bank, which your bank can help with.
As a rule of thumb, it's best to switch your old currency soon, says Shawn Murray at the Canadian Bankers Association. "We're recommending people move as early as possible."
You'll want to convert money orders, bank drafts and cheques, as well. (If you're sending bank drafts or wire payments, you can already send them in euros.) When you're emptying out your drawers remember that banks will not exchange coins.
Foreign Accounts
There is no need change a bank account in old currencies into euros on January 1. This will be done automatically by the banks. During the transition period banks will still make payments out of euro accounts in national currency when necessary.
Mutual funds
Don't expect changes to your mutual fund statements. Any changes would have occurred in 1999 when stocks began trading in euros.
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| TIMELINE: |
April 1951: Paris Treaty signed
March 1957: Treaties of Rome signed
March 1979: European Monetary System created
Feb. 1986: Single European Act signed
Feb. 1992: The Maastricht Treaty signed
Jan. 1994: European Monetary Institute created
Dec. 1995: EU backs euro as name for single currency
June 1998 : European Central Bank established
Jan. 1999: Euro is launched
Jan. 2001: Greece adopts euro
Aug. 2001: European Central Bank releases final details of euro banknote
Sept. 2001: Euros made available to banks and some retailers
Dec. 2001: Euro 'starter packs' with coins distributed
Jan. 2002: Euro bills enter common circulation
March 2002: Old currencies no longer accepted as legal tender
Sept. 2003: Sweden rejects euro
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