RGDATA, the Irish retailing organisation, has joined other European retailers in warning the cash economy could seize up during the physical introduction of the euro in 2002 due to a shortage of small change.
Ms Ailish Forde, director general of RGDATA, said retailers in the Republic were concerned there could be a serious shortage of change when the euro is launched on January 1st, 2002.
She said RGDATA was supporting proposals made by the European Retail Round Table to the European Central Bank to allow individual consumers to buy sets of euro notes in advance of January 1st, in a concept known as `frontloading". "We don't want people coming into shops with just Irish notes and coins on January 1st," she said.Retailers have been told by EU governments only to give change in euro notes and coins from January 1st, 2002 in an attempt to speed up the removal of national monies from circulation.
While some euro zone governments have said they will allow individuals to buy sets of euro coins a few days ahead of January 1st, the Euro Changeover Board of Ireland will not allow this practice.
Ms Forde said this could worsen euro shortages in the Republic and make it especially difficult for smaller retailers who will have to handle a lot of transactions and issue euro change.
Ms Forde also highlighted that any transaction charges levied on businesses to change pounds to euros could persuade retailers not to stock large amounts of euros, accentuating the problem.
Mr Philip Hamell, chairman of the Euro Changeover Board of Ireland, said no final decision had been taken on the issue of transaction charges for businesses. (Individuals will be able to change up to £500 into euros without charge).
But he rejected suggestions that the economy would grind to a halt during the currency changeover. He said banks and retailers would be `frontloaded" with adequate supplies of euro from as early as September 2001.
He said an agreement struck with banks to only supply €10 and €20 from ATM machines for the first few days should eliminate shortages of change.
Mr David Croughan, EMU project director at IBEC, said the organisation would only be in favour of frontloading consumers if it did not detract from supplying retailers with euro notes and coins.
Meanwhile, a Brussels-based retailers' group, European Retail Round Table, confirmed yesterday it had written to EU finance ministers to get them to put pressure on the ECB to change its mind on the prior distribution of euro notes and coins to consumers.
"We have written to EU finance ministers to get them to put pressure on the ECB to change its mind," Mr Philip Myers, director of European Retail Round Table.
Belgium's government has already sided with the retailers, and the French Finance Minister, Mr Laurent Fabius, has said the issue will be taken up with the central bankers at next month's Ecofin meeting in Versailles in France.
