Mr Wim Duisenberg, president of the European Central Bank (ECB), yesterday insisted that the changeover to euro notes and coins on January 1st next year would be a success, rejecting pleas for small-denomination euro notes to be distributed to the public in advance.

He told the European Parliament's Committee on Economic and Monetary Affairs the bank's general council "does not intend to change its decisions" on socalled front-loading to the public at this late stage in the changeover timetable.

Disputing claims that all retailers wanted such a measure, he pointed out that the advance distribution of euro notes to the public would upset the logistical plans for distribution.

It would also be expensive for individuals because they would have to pay for the euros in national currencies yet be unable to use them before January.

Some retail groups, especially in the Netherlands, have warned of chaos as consumers struggle to get used to the new currency and have insufficient paper money.

But Mr Duisenberg said the difficulties would be eased by the planned conversion of automatic teller machines to euros in the early hours of January 1st and loading them with #5 and #10 notes.

He also said banks planned to open on that day in some eurozone countries, while every household should receive details of the new notes in advance.

"`The challenges with regard to the cash changeover should not be underestimated," the ECB president said.

"At the same time, I am not aware of any indications that could place the effectiveness of the careful and comprehensive preparations for a smooth and successful cash changeover in doubt."

Mr Duisenberg also:

Defended the ECB's recent rate reduction of 0.25 per cent as consistent with the euro zone's harmonised inflation rate falling below 2 per cent next year from 2.9 per cent in April.

Declared it was not the bank's policy to surprise financial markets (as the last rate cut did). But if the choice was between surprise or delay of a monetary policy decision, he would accept surprise. Reaffirmed that intervention was a weapon available for use on foreign exchange markets. However, he stressed that the ECB would worry about the euro exchange rate only if it were to have "a sizeable impact on inflationary expectations".

Urged governments not to delay fiscal consolidation and to bring their budgets in line with the medium-term goal of the EU's stability and growth pact of being "close to balance or surplus".