Brussels, Madrid plan noisy launch to herald the euro

The birth of the euro at midnight is set to be a low-key affair, with major celebrations planned in just three cities - Frankfurt…

The birth of the euro at midnight is set to be a low-key affair, with major celebrations planned in just three cities - Frankfurt, Brussels and Madrid.

Outside the European Central Bank (ECB) headquarters in Frankfurt, a sculpture of the euro symbol will be illuminated.

But the ECB president, Mr Wim Duisenberg, will not be there; he says he will mark the currency's birth "privately".

The launch will be noisier in Brussels and Madrid, with firework displays that will also mark the handing over of the EU Presidency from Belgium to Spain.

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Throughout the 12 eurozone countries, however, tens of thousands of bank workers, technicians, police officers and soldiers will be working through the night to ensure that the currency's introduction goes smoothly.

From midnight, the 12 old currencies may only be used for payment - all change must be in euro.

Cash machines will shut down around midnight to allow them to be loaded with euro notes.

In Germany the Finance Ministry acknowledged yesterday that retailers will not be obliged to accept deutschmarks after midnight, although the currency will remain legal tender until February 28th.

Credit-card companies are predicting a rise of up to 30 per cent in cash-free transactions as consumers become accustomed to the new notes and coins.

And the delivery of huge sums of euro to banks and shops has prompted a security alert in many euro zone states.

In France a strike by 40,000 bank officials and post office workers threatens to derail the launch, and politicians yesterday made last-minute pleas to unions to call off their industrial action.

The Finance Minister, Mr Laurent Fabius, joined the former Commission president, Mr Jacques Delors, in calling on the unions to consider their responsibility for ensuring a successful launch.

"The French are very well prepared for the euro. One must not ruin this with strikes," Mr Fabius said.

Mr Duisenberg yesterday denied reports that Europol had discovered counterfeit euro already in circulation.

To avoid counterfeiting, the ECB insisted that, although euro coins could be distributed early, notes should not be available to the public until January 1st.

Belgium's Finance Minister, Mr Didier Reynders, criticised the decision to withhold the notes as excessively cautious and accused the ECB of treating the banknotes as if they were works of art.

"The prudence of the governors again played a role on this point, but I think the ECB made a mistake. I still don't see why you can distribute coins and not notes," he said.

Mr Duisenberg predicted that the euro, which he described as undervalued, would appreciate against the dollar in the coming months.

"We always say that the exchange rate has to reflect the fundamental relations between areas, between countries.

"At the moment Europe has a competitive advantage," he said.

The euro lost 30 per cent of its value against the dollar between January 1999 and October 2000 and has hovered below $0.90 in recent months.

Mr Duisenberg said he was optimistic about the prospects for the euro zone economy and predicted that the zone would avoid recession.

"I think we may well have reached the trough. I expect a recovery in the course of 2002, though it will be slow. I see no recession," he said.

The German Chancellor, Mr Gerhard Schr÷der, acknowledged that some older Germans would mourn the passing of the mark, which many viewed as a symbol of economic stability.

But he said the euro was as strong as the mark and predicted that Germans would enjoy even greater prosperity with the new currency.

An opinion poll published yesterday suggests that Germans are increasingly enthusiastic about the euro and welcome the launch of notes and coins.

The European Commissioner, Mr Neil Kinnock, said yesterday that the euro could become a parallel currency in Britain, and the British Prime Minister, Mr Blair, said Britain had a "massive interest" in the euro's success.

Outside the euro zone, the euro will be an official currency or an acceptable means of payment in six French territories overseas and in Monaco, San Marino, the Vatican, Andorra, parts of Yugoslavia and Bosnia-Herzegovina.