World

EU: Don't Blame The Euro

January 1, 2002 / 7:20 PM EST / AP

European Union officials insisted Thursday that the euro's debut had no general effect on prices despite complaints businesses are exploiting consumers' unfamiliarity with the new currency.

The European Central Bank did its part Thursday to keep the changeover smooth, leaving its key interest rate unchanged for the dozen countries using the new currency.

While Europeans have greeted the new euro notes and coins this week with general enthusiasm, they also have complained bitterly about basic items that have suddenly become more expensive by 10 percent or so: a breakfast croissant in Brussels, a glass of beer in Germany, or a churros and hot chocolate in Spain.

Deluged with complaints about price hikes accompanying the euro's debut at the start of the year, European Union officials insisted such cases were isolated and were not the single currency's fault.

Gerassimos Thomas, a spokesman for the EU's executive Commission, admitted there was "anecdotal evidence" that "prices of specific products have gone up here and there."

But "we also have specific examples to the contrary," he said, citing supermarkets in Germany and Greece that have lowered prices by as much as 2 or 3 percent.

"This rounding down doesn't indicate that in general prices have gone down," he said. "It indicates that there are incidents where some prices have gone up and some prices have gone down."

Flippin' For The Euro

Be careful if you flip a new euro coin when you're trying to decide whether or not to do something. The laws of chance may not apply, reports CBS News Correspondent Sam Litzinger.

The experts tell us that when you flip most coins, the odds are 50-50 that it'll come up heads. But two Polish mathematicians have been testing the new one-euro coin from Belgium and it tends to come up heads more often than other coins. The mathematicians, who apparently have a lot of time on their hands, say they think the coins were struck asymmetrically – one side's heavier than the other.
(CBS)

Overall, he said the 12 countries using the euro have reported "no general impact on prices."

With attention focused on the launch of euro cash, the European Central Bank left its key interest rate unchanged, a decision that had been widely expected. The Frankfurt, Germany-based bank last cut its main refinancing rate Nov. 8, lowering it by a half ercentage point to 3.25 percent.

Many expect it to reduce the cost of borrowing further in coming months, but recent comments from ECB President Wim Duisenberg suggest it will wait for more data on Europe's sluggish economy before moving again.

Central bank governors all pronounced themselves satisfied with the changeover, reporting no major problems.

"This success proves the euro is really going to change Europe," said Portugal's Vitor Constancio.

Already by the second day the euros were in circulation Wednesday, 200 million people — two thirds of the euro zone population — had euro coins in their pockets, and 60 million people had euro notes, obtained either from cash machines, bank withdrawals or as change from cash transactions, the European Commission in Brussels said Thursday.

A full 20 percent of all cash transactions were carried out in euros — ranging from 3 percent in Italy to 50 percent in France and the Netherlands, the commission said. More than 90 percent of cash machines in the 12 euro zone countries were dispensing euros by Wednesday.

There were no reports of major logistical problems, the commission said, noting longer lines in commercial banks and highway toll booths; longer queues for social security benefits in Ireland and Italy, as well as a brief technical breakdown of electronic payments in Austria.

Still, with old currencies good for up to two months, depending on the country, "there is some way to go before the changeover is completed," the commission said. "Many people in small towns and villages have still not replaced their national currency with euros and the practical arrangements for withdrawing national currencies are only just starting."

Pedro Solbes, the European Union's economic and monetary affairs commissioner, said in Frankfurt he expects the transition to the euro to be complete by the end of the second week, the target set by the ECB.

The euro recovered ground lost due to uncertainty over the transition, trading at around 90 cents Thursday, after a sharp rise of 1.6 percent Wednesday.

"Now we see that nothing has happened, everything has gone well, and the euro has gone back up to where it was in the middle of December," said Michael Schubert, an economist at Commerzbank in Frankfurt.

ECB officials and some economists say markets are still pricing the euro too low against the dollar, arguing that trade performance, interest rates and growth prospects speak in the currency's favor. The euro is still down by about 25 percent from its peak.