The euro introduction in the Netherlands

1
The euro introduction in theNetherlands

• Prague, 28 June 2006
• Eric Ligthart
• Ministry of Finance

2
Overview

• Role of the government
• Cash changeover
• Contigency planning
• Cost of the changeover
• Price effect of the euro
• Lessons to be learned

3
Role of the government

• Euro introduction was a sensitive event with
  unexpected issues
• Public was not willing to accept inconvenience
• Succesful introduction depended from many actors
• Debate with major actors on common guidelines and
  communication on plans and problems
• Monitoring of preparations by Ministry of Finance

4
Cash Changeover

• Logistical challenge required professional and
  detailed level of planning
• Conflict of interest between banks and retail
  sector
• Non-euro related issues influenced the debate
• Major issue length period of dual circulation
• Compromise on a short dual circulation period (4
  weeks) with measures to accelerate changeover

5
Changeover accelerated by

• All ATMs issued euro-notes as of 1 January 2002
• Retailers returned change exclusively in euro
• Starter kits with euro-coins for the public
• Facility for the exchange of hoarded holdings at
  the own bank of the customer (free of charge
  until 1 April 2002)
• Electronic payments as alternative

6
Contingency planning

• Risk of troubles in critical period
• Preparation of over 60 contingency measures
• Dedicated coordination structure (war room)
• Regular reports from relevant sectors and surveys
  on public behavior
• Consistent and timely communication with the press

7
Cost of changeover

• Basic rule no compensation for euro cost
• Changeover scenario aimed for fair distribution
  of costs between sectors
• Incentives by the government to prevent perverse
  effects that may increase cost for society
• Estimated structural benefits of the euro
  3.2 billion per year

8
Cost of changeover (mln euro)
9
Price effects of the euro

• Inflation in the Netherlands was substantially
  above average in 2001 and 2002
• Main causes VAT-increase and wage rises
• Also euro-effect caused by specific sectors
• Result public feels cheated and experienced an
  inflation substantially above real inflation

10
Inflation in the Netherlands
11
Inflation in some sectors
12
The perception of the public
13
Political cartoon (2002)
14
Lessons to be learned

• Euro-introduction was a joint effort
• Short period of dual circulation is possible if
  carefully planned
• 1 and 2 eurocent necessary? For logistical
  purposes 30 less coins
• Counterfeiting increased compared to national
  notes
• It was a mistake to play down the risk for price
  increases