DMers Watch as European Union Countries Change Currency

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BRUSSELS -- U.S. direct marketers active in Europe will face a three-year period of uncertainty beginning Jan. 1, when the Euro becomes the official currency of 11 members of the European Union.


Speaking at the opening session of the Federation of European Direct Marketing (FEDMA) Forum here this morning, Dr. Helmut Kloke, a member of the Bertelsmann media conglomerate's Euro transition team, warned that companies who wait too long before making the transition will face major problems in sales and marketing.


He said the Euro would become the official currency of the 11 nations on Jan. 1 and will co-exist with national currencies until Jan. 1, 2002, when the German mark, the French franc, the Italian lira and other moneys will be phased out.


Starting in July 2002, the Euro will be the only currency in use in most of the EU states with notes and coins available. But beginning Jan. 1, shops will have to accept checks drawn in Euros as payment even though no banknotes are available. Businesses will have to show prices in two currencies and guard against appearing to charge higher prices in Euros than they did in D-marks and francs.


The new technology will allow "a new transparency on European markets," Kloke said. "The Euro will allow people everywhere to compare prices on a European basis and buy where it is cheapest, making allowances for transportation costs."


Not all companies are waiting out the three-year transition period, Kloke noted. Electronic giant Siemens has announced that beginning on Oct. 1, 1999, it will only accept documentation in Euros. Mercedes and Phillips are expected to follow suit.


Experts, Kloke said, do not expect introduction of the Euro to lead to higher prices. Instead, they expect increased competition, especially for goods sold on the Internet, and their number is rising rapidly, to lower prices.


But Alastair Tempest, FEDMA's director general for public affairs, warned that introduction of the Euro has no history to draw on. Brazil, he noted, did introduce a new currency some years ago, but no group of nations has ever done so before in history. Direct marketers, therefore, should prepare for the transition as early as possible lest they are caught up in the rush to the post after 2002.
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