What's happening in the Netherlands concerning the changeover to the single currency?
Leon R. Molenkamp*
This small article has the objective to show what kind of preparations are being made in the Netherlands concerning the introduction of the future single currency of Europe, the euro. This will be done by dividing the interested parties in the government, commercial and central bank, stock exchanges and companies.
The Netherlands state government has announced that for internal purposes of Public Administration the Dutch guilder will remain the unit of account till the changeover to the euro coins and notes in 2002. This means that our Administrator of Taxes will be accounting in guilders till this changeover as well. For companies that would like to changeover to the single currency at an earlier date, for instance 1999, facilities will be arranged so that they will be able to declare their fiscal position to the Administrator in euro. Depending on the possibilities arising in the payment systems, the actual tax payment for companies may or may not be possible in euro. The Administrator will print the total amounts to be paid/received in guilders as well in euro. This with the objective to ensure that companies and civilians will get used to the relative value of the euro.
The new debt of the Dutch government issues after 1999 will, according the agreement reached, be in euro. In the Netherlands there is still not yet a firm statement about what to do with existing government debt. Conversion to euro debt would, logically, surely enlarge liquidity of the euro bonds, but technical problems and costs seem to hinder these developments.
The Amsterdam Exchanges recognize these arguments, but would like to stress that the government should try to create a benchmark of Dutch euro bonds to hold the present comparative cost advantage of the Netherlands. Not being the benchmark automatically means that a premium has to be paid on government debt, which of course should be avoided. The discussion thus has to be completed between the Amsterdam Exchanges, the Ministry of Finance and other relevant parties.
February 1996, the minister of Finance Mr Gerrit Zalm has set up the "Nationaal Forum voor de introductie van de euro" (National Forum for the introduction of the euro), this is a high level steering group of 18 interested parties in the euro introduction. VNO-NCW, because of its role in the business community in the Netherlands, is participant in this group. In this Forum possible problems, solutions and ways to introduce the euro are being discussed.
Points to be discussed are for instance the possibility of shaping the Dutch payment systems to an efficient changeover, discussion about the introduction date of euro coins and notes and so on. An information campaign as well has been set up. The first economic subjects to be reached were the intermediaries in information, such as banks, accountants and employer-organisations, for so far they hadn't started their preparations. Now the attention has been moved slightly to SME's and a little more to (passive) consumer information.
In this forum also the phase of double circulation of guilder and euro is being discussed. A special working group has been set up to study the possibilities of Holland to chose an other time path as other countries do. For instance following a request of the retail business, the possibility of a postponed start of the physical euro will be studied. The date of the 4th of February has been mentioned by the retail sector. Furthermore the group is studying on the possibility to shorten the period in which the euro and guilder co-exist. The logistic procedures to be followed in getting the guilder out off circulation is a next point of attention.
Commercial banks and the central bank
The commercial banks and the central bank have come to an understanding about the way to organize the period during from the 1st of January 1999 till somewhere around January 2002 (due to the fact that the euro may be introduced somewhat earlier or later than January). The Dutch central bank (DNB), like all central banks participating in the EMU, will changeover internally to the euro on the 1st of January 1999. This means that commercial banks will have to have an account at the DNB in euro. For some time facilities will be made for banks that won't be able to changeover on the proper time. These facilities will not exist after the beginning of 2002. Furthermore there is an agreement about the way to organize a large part of the 'retail' payments for as well consumers and businesses. All standardized retail payment products will continue to be in guilders till the 1st of January 2002. This means for instance that cheques, automatic payment services and all payments connected to counter payments (debit-, credit-cards and so on) will be in guilders till that moment. This way is has been made sure that a company or consumer will not be bothered with the consequences of an early introduction of the euro, if they don't won't to take part in the process. The euro accounts will be introduced for all businesses and consumers at the same moment the euro coins and notes will appear in the economy. This is of course only the case if the introduction of euro coins and notes will take place at the same time. At this moment there is a huge discussion about a possible 'split' in the introduction of the euro notes & coins and the euro on accounts. This is due to the fact that the retail organisation wish for an introduction not being the 1st of January, while the financial services are going to changeover to the euro for their accounts on that exact date.
Commercial banks are allowed for all other services to offer products in as well guilders as euro. This means that a euro debt or saving can be realized. Market forces may produce a large variety of euro products. Companies and consumers can be offered an euro-account if they wish so. This is for instance of importance to holders of (equity) stock in euro. There still is a discussion if business-to-business payments can possibly be made in euro in our national payment systems.
Salary payments by the company can be made in euro, if the payments are centrally delivered at the national payment systems. These centres will convert these payments into guilders. Employees thus will receive guilders on their accounts if they wish so.
Payments in euro from one company to another will have to be converted by a bank. The rule 'no compulsion, no prohibition' is declared as follows: a bank cannot refuse a euro payment, but the receiver of the money cannot be forced to accept the euro. So a conversion facility has to be made within the bank.
The Amsterdam Exchanges (AEX) have announced in several working groups that they, and so do several other exchanges in Europe, will changeover to the euro at the 1st of January 1999. Now a project group is working on the technical aspects. They hope to have built a working system in 1997, test it in 1998 and can operate with it from the 1st of January 1999.
Due to the fact that there are about 400,000 private holders of stocks, for this group of people euro accounts at the bank should be available (see above). Banks therefore already have announced that also every private holder of stocks will be offered the choice between an euro and guilder accounts.
Surveys show that still a large part of the companies in the Netherlands doesn't know what the consequences of the introduction for firms are, or do know little about the euro at all. This is why the Nationaal Forum has launched information campaigns. Several other organisations (banks accountants and of course VNO-NCW) have organised information campaigns, workshops, conferences and so on. Especially the large corporations have started their preparations. Most of them have already started to collect information. Several others have already started to form internal and external discussion groups. Some very large companies, for example Philips, have already announced that they will changeover internally to the euro as soon as the 1st of January 1999 (see article from Philips. in the present issue, edit. note).
Concerning the large interest by commercially orientated conference agencies VNO-NCW foresees that a lot of practically orientated conference will be organized within the coming months. VNO-NCW will develop some new brochures about the euro, will continue to give information through its euro-desk and maybe organizing a new set of euro seminars next summer. Special attention needs to be given to SME's, especially by informing VNO-NCW's sector orientated branches.
These branches are offered the opportunity to profit from knowledge within VNO-NCW. Model-brochures can be adjusted to the own specifications of the sector. Next to that VNO-NCW offers help in organizing meetings about the euro by sending a lecturer or provide names of people who can give these lectures.