EMU: SIX CHALLENGES FACING EURO CANDIDATE COUNTRIES.

• Position: European Monetary Union

1. Beware of the Big Bang.

   While most of the euro candidate countries seem to favour the Big Bang approach for switching over to the euro (in one go), Mr Almunia has warned them that that while this option has certain definite advantages by avoiding a complicated situation in which the euro can only be used for written transactions and local money will still be used for cash payments. At the same time, the Big Bang approach "requires the countries concerned to be even better prepared" than the first-wave countries which benefited from a transitional period.

2. Administrative delays.

   The Commissioner recalled that candidate countries tend to focus their plans on the cash changeover (coins and notes) at the risk of under-estimating "the time necessary" for businesses and public administrations to adapt to the new system.

3. Practical considerations.

   The Commissioner recommended that not only should all bank machines be operational in time for D-Day and able to dispense euro notes, but also that bank opening hours be extended during the first days of the changeover to ensure the widespread availability of cash in euros. In addition, during the period of dual circulation (euro and local currency), it is essential that retailers give change exclusively in euro, in order to speed up the withdrawal of local currency from circulation. Moreover, consumers should be urged to avoid exchanging small amounts of national currency at banks, but rather to spend it in shops. And finally, individuals should be encouraged to exchange large sums of hoarded coins well before the final switchover in order to facilitate exchange operations.

4. Preventing price increases.

   Knowing that 75% on average of the people in these countries are afraid of price abuses during the changeover and from the experience gained during the first wave of single currency members, the Commission has made several recommendations. It...