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European Central Bank Unveils New Euro Money - 2001-08-30

The European Central Bank has unveiled the new euro notes and coins that will become legal tender in 12 of the 15 European Union countries as of January 1, replacing individual currencies such as the German mark and the French franc. The bank launched a publicity campaign Thursday for the new single currency just after it cut key interest rates for the 12 nation euro zone by one quarter of a percentage point.

It is only the second time this year that the bank, known as the ECB, has cut interest rates. That is in contrast to the U.S. Federal Reserve's seven rate cuts so far this year.

ECB President Wim Duisenberg has long been concerned about a rise in inflation if he lowered rates. But there has been heavy pressure on him from finance ministers to ease borrowing costs in order to spur flagging growth in the euro zone.

At a news conference Thursday at ECB headquarters in Frankfurt, Mr. Duisenberg said the bank was lowering its main interest rate from 4.50 percent to 4.25 percent because of the severity of the economic slowdown in the United States. "The slowdown in the United States is larger and deeper and lasting longer than had been anticipated earlier," he said, "and we now have clear indications that that, of course, has its impact on Europe, and also has its impact on inflationary developments in the near future." Analysts at major European financial markets agreed the bank's decision was welcome, but said it would not have much immediate impact.

Mr. Duisenberg later presided over a ceremony that gave the euro zone's 300 million people a first glimpse of the new notes and coins they will begin using only four months from now. He calls the new euro currency the symbol of European integration. "In a few months' time, on the first of January, 2002, these 300 million people will, for the first time, be able to cross 12 national borders and discover that the currency which their neighbors across the border are using is the same as the one they are using at home," he said. "Europeans will realize that they are home throughout Europe."

The eight euro coins will have one side common to all 12 countries, with national motifs on the reverse side. The seven notes will have no national characteristics. Individual national currencies will circulate alongside the euro for up to two months after the single currency's launch.

Belgian Finance Minister Didier Reynders says it is important to begin explaining how the euro will work. "I'm sure that, with such an information campaign, it will be possible to have a good transition," he said.

The campaign is designed to explain the euro's security features and heighten public awareness of its arrival. Opinion polls show that only 40 percent of the euro zone's population feel confident about the new currency. Many respondents say they fear being cheated by shopkeepers using the confusion inherent in the switch-over to charge higher prices.