The arrival of euro cash in 2002 may eventually bear down on inflation despite the risk of a price rise in the short term, a top European Union official said today.
"Euro notes and coins, to be launched at midnight on December 31, would make it easier to compare costs," said European Commissioner for Economic and Monetary Affairs Pedro Solbes.
That would "lead to greater price transparency", which would eventually produce "downward pressure on inflation" in the 12-nation euro zone, Solbes told a news conference.
But the European Union commissioner said he was still worried about possible upward pressure on prices in the short term if retailers rounded up prices after converting them to euros.
Belgian Finance Minister Didier Reynders, chairman of Euro Group of euro zone finance ministers, said the conversion of Belgian francs to euros would lead to lower taxes in Belgium.
Reynders said the reduction in taxes "due solely to the change from the Belgian franc to the euro" would total one billion Belgian francs (24 million euros).
"We will try to give a good example to the markets," he added.
He gave no further details.
AFP