Changeover to EURO in Estonia 11.09.2013 Riga Marika Merilai Eesti Kaupmeeste Liit www.kaupmeesteliit.ee
Nov 12, 2014
Changeover to EURO in Estonia
11.09.2013
Riga
Marika Merilai
Eesti Kaupmeeste Liit
www.kaupmeesteliit.ee
Changeover to euro in Estonia
Agenda
• Practical information - basic principles
• Dual circulation period
• Rounding rules
• Exchange of kroon cash into euro
• Cooperation
• Communication
• Lessons learned
www.kaupmeesteliit.ee
Changeover in Estonia vs. EU in 2002 and Slovakia in 2009
� Things were easier for us as and for you: – Euro already existed
– We could learn from other countries’ experiences (Finland, Slovakia)
– We are a small country – less logistical problems
� Things are more challenging for us as:– Less international awareness: we had to put more emphasis on
informing foreign partners and travellers
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Changeover in Estonia
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� Estonia joined EU and the ERM II in 2004 with existing EUR/EEK exchange rate 1 euro=15,6466 kroons
� Estonia started the preparations in 2004-2005 and the Government formed an expert commission
� On 1 September 2005, the Government approved the first version of the national changeover plan.
See the latest, 9th version (.pdf) in 2010
Practical information - basic principles
� “Big bang” for settlements, contracts and accounting,
� 2 weeks dual circulation
� All banks changed kroon during one year (6+6 months) and 1 month before €-day
� Eesti Pank (Estonian Bank) changes kroons against euros with fixed exchange rate without time or amount limits
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Practical information - basic principles
� Retail sector did display prices in the kroon and the euro at least 6 months before and after €-day
� No harm for citizens
� Continuity of contracts
� Responsibility. Expenditure related to the changeover were covered by market participants themselves
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www.kaupmeesteliit.ee
Starter kits of Estonia's euro coins
� In December 2010, the residents of Estonia could buy a starter kit of Estonia’s euro coins (42 euro coins with value of 12.79 euros)
� Starter kits were purchased from all the branches of commercial banks and also from post offices.
Practical information - basic principles
Practical information - basic principles
Business impact
Although mostly perceived as an IT problem, Euro changeover affects
almost all areas of a company:
Finance and Accounting Operations
Controlling Legal
Human Resources Marketing and Sales
Information Systems
IT - the largest affected area due to its supporting function in all areas of business.
IT cost tend to be 40-60% of company’s total change over costs.
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Dual circulation period
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Since the €-day - a two-week dual cash
circulation period:
� payments were allowed in kroonsand euros, but change was mostly given in euro
� after the period of dual circulation, the only legal tender in Estonia is euro.
Dual circulation period
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Practical recommendations for the period of parallel circulation:
� Plan a small reserve for the change of year to enable you to take cash in euros
from your circulating capital, if necessary.
� If your shop wishes for a security company to transport the cash, all the necessary agreements have to be made by the end of September at the latest.
� During the period of parallel circulation, the number of cash registers in service has to be higher, since settling accounts in two currencies takes more time.
� It is recommended to return change to customers in euros during the period of parallel circulation.
Display of prices in two currences
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� The dual display of prices let customers compare prices.
� For six months before and six months after €-day, retailers were required to display of prices in two currencies.
� Retailers were recommended to display prices (also unit prices)in both currencies in as many ways as possible, on websites, in promotional materials, catalogues, total amounts of invoices, purchase receipts, etc.
Display of prices in two currences
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�The dual display of the amounts payable was especially importantprior to €-day in order to prevent customers from calculating amounts payable in euros using an inaccurate exchange rate.
�The Ministry of Economic Affairs and Communications together with representatives from trade sector draw up guidelines for the dual display of prices.
MILK 2,5% 0,5 L
4.20 EEK 0.27 €8.40 EEK/1L 0.54 €/1L
Rounding rules
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� Prices were converted at the exchange rate of 1 euro=15.6466 Estonian kroons.
1 EUR = 0.702804 LVL
� Rounding is carried out to an accuracy of at least one euro cent calculated to three decimal places.
� If the third decimal is 5 or above, the converted value is rounded up.
Exchange of kroon cash into euro
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Cash exchange took place through
the following official channels:
� Bank branches
� Automated teller machines (ATM)
� Retailing
� post offices
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Cooperation• Ministry of Finance
• Ministry of Economic Affairs and Communocation
• Estonian Bank (Eesti Pank)
• Estonian Banking Association
• Estonian Chamber of Commerce and Industry
• Consumer Protection Board
• NETS
• IT companies
• Security companies
• etc
• Estonian Traders Association
• Retail chains and shops
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Cooperation
� Frontloading and sub-frontloading of euro banknotes and coins before €-day (Estonian Banking Association, banks, G4S, retailers etc)
� Coin campaigne for donation of Food Bank ( 1226054 kroons or 78359 euros. Estonian Banking Association, Estonian Traders Association, Food Bank, G4S)
� Fair pricing campaign (started in the end of August 2010, Estonian Chamber of Commerce and Industry, Traders Association etc)
Euro communication� One plan of communication
� Euro web page: euro.eesti.ee (in Estonian, Russian and English)
in 2010
� Guidelines
� Brochures to businesses, newspaper on euro to schoolchildren
� Moving exhibition
� Euro-calculator
� Newspaper articles, radio, TV
� Conferences, info-days and trainings for different interest groups
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www.kaupmeesteliit.ee
Lessons learned
� Timing. Better to start earlier with the assesmment of the impact
� Communication and information. Communicate and
create awareness. The right information in time to the right people.
� Cooperation. Contact IT supplier. Cooperation with different
parties, associations, working grouppes.
� Training. Estonian Bank, associations, companies etc
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Lessons learned
What we could take into account?
� Transactions in two currencies took more time we did think.
� Amount of coins was bigger and weight heavier
� During the first days customers used more kroons
� For SME-s was difficult to forecast the need of euro cash
� In rural places retailers were exchange points like banks
� The period of parallel handling/circulation of two currencies
could be even shorter.
At the end of the fifth changeover day 54 % of consumers were paying
with euro only when using cash and all (96 %) customers were receiving
their change in their new currency.
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Retail sales (mln euros) 2005-2012
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2005 2006 2007 2008 2009 2010 2011 2012
Jaekaubandus, v.a mootorsõidukid ja mootorrattadToidukaupade jaemüükTrend (Jaekaubandus, v.a mootorsõidukid ja mootorrattad)Trend (Toidukaupade jaemüük)
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Retail sales volume index 1998-2013, compared with previous year
Allikas: Statistikaamet
-20
-15
-10
-5
0
5
10
15
20
2005 2006 2007 2008 2009 2010 2011 2012
Mahuindeksi muutus %
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Consumer price index
Source: Statistikaamet
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Customers,
retailers:
� be patient,
� be careful,
� be reasonable,
� be understanding,
� just do your best!
Good luck!
www.eiro.lv
http://www.euro.eesti.ee
www.kaupmeesteliit.ee
Thank you!
Estonian Traders´Association
Eesti Kaupmeeste Liit
www.kaupmeesteliit.ee
www.kaupmeesteliit.ee