Europe's internationalists are now in control of the political affairs of all the major nations of Europe except Great Britain and Switzerland. They are pursuing the creation of the new Eurocurrency system -- the mark of sovereignty -- with a religious fervor comparable to that shown by the builders of the Tower of Babel (Genesis 11). We can expect similar results.
Here is the reality, according to the attached article: "It’s important to note that no company can be fully euro compliant today. Denomination rules have not been set, nor have the participating countries been determined, and settlement systems are also being fine-tuned."
The money center banks in the United States are part of this system. Their managements are devoting highly scarce programming resources to Euro conversion that would otherwise go to y2k repair operations.
This appeared in INTEGRATION MANAGEMENT (Feb. 2).
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Europe’s Economic and Monetary Union, once given a moderate chance of making landfall, is now just about as certain as death and taxes. Estimated time of arrival for the first and hardest hitting wave: Jan. 1, 1999, when European financial institutions must be fully compliant as financial markets begin trading Jan. 4 with a single currency, the euro.
The EMU wave is enormous for the financial sector, some five to six times the size and complexity of the Year 2000 problem, analysts say. Farther inland, the euro conversion’s ripple effect will leave no global corporation in any industry untouched, as the euro brings with it a host of business issues — everything from redirecting foreign exchange operations to supply chain billing to product pricing.
Companies with any ties to Europe are being challenged not just to update their information technology systems, but to modify business practices and capitalize on euro opportunities. . . .
On Jan. 1, 1999, the EMU member states will see the rates of their respective currencies irrevocably fixed to the new euro currency, and the euro will become the legal tender within those countries. European financial institutions will begin trading internationally in the euro. The newly established European System of Central Banks begins the printing of euro notes and coins, but not their circulation.
During the following two years, public and private sector entities will prepare for the changeover to this new currency, while conducting business in both the existing national currency and the euro. On Jan. 1, 2002, the process of actually replacing national currencies with the euro will begin, with 76 billion coins and 13 billion bills of the old currencies being withdrawn from circulation and euro currency going into circulation.
As recently as six months ago, corporations worldwide expressed doubt over whether the monetary union would materialize, but most now are resolved to its inevitability. “A lot of political capital has been put into this, and to turn back on it now, a lot of people would come out with egg on their face,” says Kevin Roth of the Information Technology Association of America, whose White Paper on the euro is due out this month. “It’s going to go through, and enterprises should start preparing for it.”
It’s important to note that no company can be fully euro compliant today. Denomination rules have not been set, nor have the participating countries been determined, and settlement systems are also being fine-tuned. Should companies still get a jump-start on euro conversions? It depends on who you are. Global financial institutions like Chase Manhattan, Citibank and Bank of America, and investment managers like Merrill Lynch, JP Morgan and Goldman Sachs have significant euro projects under way. And likely to be affected next by the euro wave is the retail industry. . . .
With the exception of worldwide banking institutions and a handful of U.S.-based multinational corporations, American companies until now have watched the EMU’s ebb and flow with morbid curiosity but have done little to plan for it, perhaps because information has been scarce. . . .
Overall spending figures are much higher for the financial industry, according to The Gartner Group. “In the finance area, maybe 85 percent of your programs are affected by monetary union,” says Nick Jones, research director and vice president for The Gartner Group in London. Gartner estimates that financial institutions will each spend an average of $100 million on IT costs — an equal amount will be spent on general business change. And much of the financial industry is in the thick of euro preparation. . . .
IBM’s consulting group in London has pooled 15 to 20 analysts and program managers to help clients with euro conversion, and they’re supported by consultants from IBM Global Services, according to Nacamuli. Together, they serve 40 to 50 clients, mostly banks and financial institutions and a handful of multinationals. IBM offers EMU impact analysis, consulting on building new business requirements and strategies, as well as stay-in-place scenarios for determining the minimum needed to be able to survive. Once clients decide what they want to do, IBM offers project management, a database of compliance rules, strategic consulting and training programs.
Interestingly, IBM is putting off its own conversion to the euro until 2001, instead it is going to continue working on the Year 2000 problem, sources say. . . .
Solving these closely coinciding problems represents an array of differences from breadth and complexity of the problem, to dollars spent, to employee skill set demands. Banks are spending five times as much as they did on the Year 2000, insurance companies three to five times as much. For other industries those proportions are expected to be smaller because fewer systems will be affected.
Those thinking of transferring Year 2000 teams to a euro conversion project may want to think again. “Year 2000 is a very technical fix, whereas with euro conversion, people have to have greater knowledge of business processes,” cautions ITAA’s Roth. “Somebody working on Y2K can pound out code, but somebody working on euro conversions is going to have to understand customers’ business processes and structure their needs. It’s a business fix.”
Most integrators expect a strain on resources at some point leading to the final 2002 conversions, while large consultancies like Price Waterhouse say their pool of resources will suffice. . . .
Conversion to the euro brings with it a broad range of business and IT problems and opportunities. And while the Year 2000 and euro conversions compete for attention, and the euro’s transition period serves as a buffer for many companies, those with European ties should lift their heads from Y2K just long enough to see what’s coming, or they may be blindsided by the euro wave.