You either love New Year's Eve or you hate it but however you want to spend it, you will not want to sit hunched in front of a computer surrounded by information technology specialists and leftover cups of coffee. In what will be a dress rehearsal for the Y2K problem, to hit computer systems a year later, thousands of senior bank managers, IT personnel and settlements and support staff will be working feverishly in war rooms across EU capitals on Conversion Weekend - the first weekend of 1999.
The starting pistol for the final countdown to the launch of the euro will sound on Thursday, December 31st. The final conversion rate for the pound and other participating currencies to the euro will be fixed at a meeting of EU finance ministers and after that conducting financial transactions in and with euro-zone countries will never be the same again. From Friday, January 1st, the new currency will officially be in existence. By the following Monday - the first official day of business after the New Year holiday weekend - the pound will have ceased to exist as a sovereign currency with a variable value on international money markets. Financial wholesalers such as central banks, banks and market dealers will begin using euros immediately. During the weekend, staff will work on converting account balances, redenominating bonds and other securities, and changing computer systems to accommodate the euro infrastructure. In London, between 30,000 and 50,000 are expected to work in the City and part of the Underground will be open on January 1st to service the deluge. Hotel rooms have been booked so the inconvenience of commuting after working overtime is avoided.
In Dublin, although there will be fewer people working, the inducements for valued staff will be there, and a bottle of champagne or two may be opened, according to Mr Michael Watson, head of EMU planning at Bank of Ireland. It is too early yet, he says, to know whether staff will have to work day and night over the weekend.
"All going well, we may get a few hours off here and there," he says.
The head of EMU planning at Ulster Bank, Mr Pat McArdle, estimates that up to 2,000 extra people will work in Dublin on that weekend, with about 200 working in the bank's George's Quay centre - "about a quarter of the total staff". The plan on December 31st is for the euro zone's central bankers to provide the definitive closing rates for the European Currency Unit (ECU) at 10.30 a.m.
The conversion rate will be set by the European Commission at 11.30 a.m., followed by its adoption by the EU's finance ministers an hour later. The event will be televised and celebrations will be held in Brussels. By 5 p.m. the rates will be copperfastened by regulation in the Official Journal of the European Communities.
Most of the work will be on conversion of "historic data", such as deals in the system and forward contract.
Apart from the redenomination of balances and transactions, Mr Watson says the other aspect to the weekend's work will be the final configuration of IT systems, the culmination of a four-year process and the excuse for a separate celebration following the first full day's trade on January 4th.
The locking into the euro follows the interest rate cuts made in all 11 euro-zone countries on December 3rd. Benchmark rates were set at a common 3 per cent rate in all of the so-called "first-wave" countries except Italy to "counter the threat of a slowdown in economic growth", according to a statement from the German and French finance ministers.
But the threat to conversion weekend is of a "payments gridlock", according to Mr McArdle. "If it gets big enough, it could cause systemic failure and a shortage of liquidity," he says.
Fail-safe mechanisms, however, have been established and in the event of a collapse of the system, the major players will be prioritised and kept operating on more manual systems.
According to the Bank of England's publication, Practical Issues Arising From the Introduction of the Euro, "the conversion weekend will involve much greater than normal operational risks". The central banks and other regulatory authorities will be keeping a close eye on proceedings and "play a more active role if necessary".
Precautionary measures undertaken by firms include a reduction of trading activity from now on and "increasing the frequency of reconciliations and minimising volumes of unsettled trades going into the conversion weekend". Central banks will be at hand as part of their function of maintaining the stability of the financial system. Mr McArdle notes that major activity on international markets will boost European trading. "Dealers will deal if they think there is something in it for them."
The European Commission will make the rates public on its Website, http://europa.eu.int/ eurobirth at 11.30 a.m., December 31st.
