Learning to live with the euro

Two things are going to happen with the euro during 1997. First, the accounting software industry will get a better handle on all the IT implications of the European single currency. Second – and much more importantly – UK industry will probably begin to realise that the euro has strategic implications far beyond those implied by the current thinking that it is ‘just another currency’.

While many accounting software packages have multi-currency facilities, the euro throws up unique problems. And there’s no package yet that meets all the requirements.

Issues still to be resolved include taxation and any last-minute accounting requirements dictated by Brussels. Martin Mackay, European product strategy manager at PeopleSoft, says his company aims to have a fully euro-compliant package available by the second half of 1998, but ‘nobody understands what that means’.

A key concern is ensuring maximum flexibility by retaining the ability to ‘drill down’ from euro or home currency accounts straight through to transaction level in, say, deutschmarks. Typical problems will be that it will not be allowable to convert directly from deutschmarks to French francs. Conversion will have to take place by reference to each currency’s ‘irrevocable’ rate against the euro to avoid rounding errors.

It seems that just about every business in Germany is getting ready for the euro – unlike the UK. Too little attention is being paid to the practicalities here. Even the IoD which is strictly opposed to joining the single currency recognises there is a very serious prospect of it actually happening in the core countries, which will have pricing and investment implications in the UK. But they are just not being thought through.

There is one other problem created by the euro. The European Monetary Institute has just approved a new currency symbol – a pseudo-lower case ‘e’ with a pair of tram lines running across it. And it isn’t in the standard character set.