Coping with New Year hangovers from the euro
Introduction of euro notes and coins involves complex decisions on the part of bankers on how to deal with legacy currencies in contracts.
Is the UK watched from the sidelines on January 1, around ?14 billion in euro notes and ?50 billion in coins were distributed across the 12 eurozone member countries. If and when the UK finally decides to join the party, the far-reaching changes facing UK banks will not be limited to operational and compliance matters. UK entry will redefine the UK banking marketplace, raising new strategic challenges and threats for the institutions concerned.
Instead of watching and waiting, UK banks need to plan ahead. As Lynne Guyton, a senior manager at management consultants Accenture points out, the euro will continue to be an important driver in the evolution of Europe's capital markets. From a strategic perspective, banks need to be taking these into account. Guyton says: "Treasury services post-EMU will be principally driven by the polarization of currency risks between the world's two major currency blocs - the US dollar and the euro."