As Swiss banks and shops reopen after the holidays, they face a new reality: the euro has made its debut among more than 300 million Europeans.This content was published on January 3, 2002 - 14:56
Switzerland, which is surrounded by euro-land states, cannot expect to remain unaffected by the appearance of the most widely used currency unit in Europe since the Roman Empire.
Although Switzerland retains the Swiss franc as its currency, millions of European tourists will use the euro in the country, and Swiss tourists travelling to participating states will also become accustomed to it.
The introduction of the new single European currency seems to have been largely problem-free in the 12 members of the European Union that have made it their official currency. Some people had to queue for a long time at German banks, and in Austria some 2,000 automated cash machines broke down for around an hour, but otherwise few difficulties were reported.
Many Swiss retailers, including the shopping giants Migros and Coop, have decided to accept the euro as legal tender, although change will be returned in Swiss francs.
Some analysts expect the euro to become almost a parallel currency in Swiss border towns.
Change bureaus are already reporting keen interest in the new currency, with more than one million euros purchased in Switzerland in the first two days of the New Year.
"It was a large success," Swiss Federal Railways spokesman, Jean-Louis Sherz told swissinfo, "We opened our change offices at Zurich and Basel mainline stations at midnight on January 1st and there were no difficulties."
Several hundred people queued up for hours to get the new currency as soon as possible, and exchange offices had to extend their opening times.
The almost glitch-free introduction of the euro was welcomed with a huge sigh of relief on the currency markets and helped the euro enjoy one of the best days of its volatile three-year life.
The euro posted gains of more than one and a half per cent against the dollar, rising above the $0.90 mark. It also gained against the Swiss franc to stand at around SFr1.4860.
But the euro is still well below the levels at which it stood when launched as a trading currency three years ago. Then it stood at $1.16.
And most analysts believe the euro has a lot of work to do before it can claw back towards parity against the dollar.
"It's true the euro has recovered against the dollar on the currency markets but it has remained in the range of $0.88 to $0.91," says Cantrade Private Bank economist, Marcus Allenspach. "So it's only recovered to the top of the range and given the fundamental strength of the dollar, I think it's unlikely to break out."
Some of the most spectacular gains made by the euro in the last couple of days have been at the expense of the British pound.
Britain remains one of three EU countries not to adopt the single European currency, but the successful launch of the euro notes and coins increased speculation that the British government might call a referendum on the issue next year.
The other EU countries opting out of the euro are Sweden and Denmark.
If Britain were to join, it would provide a further boost for the currency and isolate the Swiss franc even more. But for all that, Allenspach cannot see the day when Switzerland would abandon its own currency,
"There have been several occasions when people have predicted the death of the franc," he says.
He recalls the time more than a decade ago when there were calls for the weakening franc to be abandoned in favour of the Deutsch mark.
"And then a few years ago the franc was very strong again and people said we should link the franc to the German currency to make things easier for industry."
"Some companies even said the would pay salaries in marks to reduce exchange rate exposure but nothing happened and I think it will be similar now."
by Michael Hollingdale
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