Category: Archive

Irish in Euroland

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — Huge hype and fanfare greeted the birth of Euroland with the arrival of the New Year, but for most people Ireland’s membership of the new economic club of 11 will mean little until the currency and coins go into circulation in 2002.

For those in banking, trading, credit card companies and stock-brokering, euro conversion meant a bank holiday weekend at their desks switching over their computers in preparation of the currency going live for their businesses.

For them, the 78.7564 pence has immediately become a euro.

But most in the euro-zone greeted the change with apathy. The coins jangling in their pockets and purses continue to be pence, francs, escudos, deutschmarks and lira.

The euro switchover was heralded as a "new era of price stability and low interest rates" by Taoiseach Bertie Ahern.

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"Every analysis done in the Irish economy over the last decade about the euro showed that we would gain out of it," Ahern said. "Qualifying for EMU was the goal which helped to anchor social partnership over the past 11 years. The same combination of long-term strategy and short-term flexibility will be required if we are to realize its benefits."

Finance Minister Charlie McCreevy, suffering from a heavy cold, traveled to Brussels for the glitzy launch against the advice of his doctor.

"I am 110 percent convinced that it is the right step for Ireland at this particular stage," McCreevy said.

The most profound economic change in Europe this century was all too much for the new European Central Bank president, Dutchman Wim Duisenberg, who was shown on TV snoozing through some of the proceedings.

There are now 290 million people and just under a fifth of the global economy that will hang on the words of the tired Duisenberg in the same way that U.S. Federal Reserve chairman Alan Greenspan can move markets with his pronouncements.

In Dublin, Central Bank official Frank Swords made the last £1 million "spot market" trade on the punt just as the new rates were to be announced. He had been there at the birth of the punt as an independent currency. On March 30, 1979, Swords had also made the first punt trade for the bank when the Irish currency broke free from sterling.

The Irish stock market reacted positively to the changeover, ending the day Monday at 5,076, up 81, or 1.62 percent.

The euro-change will be particularly testing for the Irish economy as Britain and sterling are staying out. Also remaining independent of Euroland are Sweden, Denmark and Greece.

From now on key issues such as the value of the euro against other currencies and interest rates have passed out of Ireland’s hands and such decisions will be made for all of Euroland.

The euro will mean banks will lose out on currency transactions within the zone and trade and travel should be cheaper as a result.

The new currency transparency will mean consumers can check out prices across the 11 countries.

Despite a common market in the E.U., there are still huge price variations that have remained largely hidden from ordinary punters by the different currencies.

Now, euro-citizens will be able to see clearly for the first time that beer prices can vary by up to 50 percent, cars by the same amount, insurance by 55 percent and credit card costs by 65 percent.

It remains to be seen whether this will result in demands for price cuts and more cross-border shopping.

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