Countdown to euro cash

With just four months to go before the euro becomes legal tender in the 12 European countries that have adopted it, armoured vans will begin distributing the more than 50bn coins and 15bn notes that will be needed by shops on 1 January 2002.

But there are fears that unfamiliarity with the new currency will make it easy for counterfeiters and fraudsters - and that shops could take advantage of the changeover to boost their prices secretly while converting them into euros.

Advocates of the single currency believe that the final creation of a monetary union from Ireland to Greece, with an economy nearly the size of the USA, will lead to lower prices across Europe and boost growth.

Although the euro has existed as an electronic currency used by banks and other financial institutions since January 1999, the introduction of the cash currency will be a crucial test of the acceptability of the project to its citizens.

Short-term costs

But the economics and logistics of the changeover - the largest ever attempted - are formidable.

There are fears that shortages of the new currency may develop in the first weeks, when shops will still accept the old notes but are supposed to give change in euros.

And the cost to businesses of the conversion is likely to be substantial, with everything from vending machines to software accounting systems needing to be changed.

The euro changeover could also affect the black economy, with many European countries having a substantial sector that uses cash only to avoid taxes.

Already there are signs of a building boom in Spain fuelled by illicit cash, which will become difficult to hide in six months time.

Blanketing the airwaves

Most important of all is how the euro will play with consumers.

There is evidence that many people, and even many small businesses, are unaware of the change.

The ECB plans to blanket the airwaves with its information campaign, using the slogan "the euro, our money."

And national governments will distribute millions of leaflets to homes and businesses, as well as holding conferences and fairs.

But ultimately it is up to the public - already sceptical of many EU institutions - to accept the new currency.

Euro a reality

Many economists predict a shaky start, with uncertainty meaning that people postpone their purchases.

Already Belgium has postponed its traditional January sales to later in the month so that people can familiarise themselves with the new currency.

The European Central Bank will be watching closely to see if the changeover boosts inflation - which could lead to rate rises despite the global economic slowdown.

And foreign currency markets - where the euro is already a reality - could mark down the currency.

Since the euro was launched on 1 January 1999 on foreign currency markets and other financial markets, it has lost 30% of its value against the US dollar - although recently it has had a brief recovery.

On the other hand, making the euro a "real currency" could finally engender the long-missing confidence in the euro, and boost its standing on the currency markets..

The use of the euro as a legal tender - as opposed to its use by banks and other financial institutions - will be the key test of monetary union, the project that has dominated the EU for the past decade.

And those outside the eurozone - both in the UK, Sweden, and Denmark, and the countries of Eastern Europe who are hoping to join the EU - will also be casting a wary eye on the process.