Banking and investment services: Commission publishes practical guidelines to facilitate the preparations for the use of the Euro in financial information systems.

United Kingdom
The guidelines aim to help companies and organisations to develop changeover plans for their financial information systems. The document notes that even though the effects of the introduction of the euro may be limited for companies and organisations in non-participating Member States, these companies and organisations nonetheless need to be prepared for dealing with transactions denominated in euros and may also have subsidiaries in participating Member States.

The guidelines summarise and interpret the important parts of the legal framework for the use of the euro. The euro will be introduced gradually from 1999 to 2002. On 1 January 1999 the rates of conversion between the participating national currencies and the euro will be irrevocably fixed and the euro will become a currency in its own right. On 1 January 2002 the new euro banknotes and coins will be put into circulation in substitution for banknotes and coins in the old national currency units. During the transition period two different currencies will be used within the same Member State. This framework brings about a unique situation for which financial information systems must be prepared.

The guidelines offer an overview of strategic considerations and critical success factors in the changeover process. It is noted that strategies on the introduction of the euro and the year 2000 problem may be usefully co-ordinated but that the two problems are fundamentally different. Critical success factors involve setting up a euro project team to determine the scope and nature of the changeover; setting priorities taking into account the complexities of the various information systems; reviewing existing systems and training of employees. Enterprises must decide on overall strategy whether it be a 'big bang' changeover, a gradual changeover or implementation of new information systems. Organisations which are dependant on third party software must reduce associated risks to an acceptable level.

An analysis of functional and technical issues is also provided by the guidelines, to assist companies in preparing for the changeover to the single currency. Functional problems are related to input, output, the interface problem (where systems dealing in euros and those dealing in national currencies have to work together during transition periods) and conversion of historical data.

Technical issues include rounding and conversion software problems; data pollution avoidance (where different amounts are accidentally combined); dealing with decimals and dual display of amounts and the modification of financial models such as spreadsheets. Conversion may be particularly difficult in the 'description' fields of the database. Two methods exist for conversion and enterprises need to decide which method they prefer to ensure consistency.

The guidelines conclude that thorough preparation is essential to take full advantage of the introduction of the single currency, that information systems will have to be modified in order to cope with the changeover to the euro and that the problem of rounding differences will require particular attention if significant inconveniences are to be avoided.