European monetary union: A technical ascent
All over Europe, banks are counting the cost of preparing for the single currency whether their home country is "in" or "out". Apart from buying new bank-wide technology, they face a loss of trading revenue and a threat to their corporate client base. Not to mention the thought that it may never happen. Peter Lee reports
How much will it cost European banks to adapt to the single currency by 1999? A medium-sized fortune, they are beginning to realize.
Banks in countries due to participate in European economic and monetary union (Emu) will have to convert every domestic account and every product they offer into the new currency. For three years they will have to operate in national currency and in euros, and finally they must make sure they have the systems and logistics to support the withdrawal of old national currency coins and notes. When the UK changed to a decimal currency in 1971, the process of adapting to new coins and notes took two-and-a-half years. It amounts to an overhaul of banks' entire operating systems.
Edouard de Lencquesaing, executive vice- president co-ordinating single currency preparations for Crédit Commercial de France, says the bank's investment will probably be the equivalent to one year's normal spending on systems development. But he admits: "The areas of greatest investment spending are not yet clear. Ideally, we would like to centralize some euro functions." But that may not be possible. "As of today, the project is spreading through and touching all parts of the bank."