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Changeover to EURO in Estonia
11.09.2013
Riga
Marika Merilai
Eesti Kaupmeeste Liit
www.kaupmeesteliit.ee
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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
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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
www.kaupmeesteliit.ee
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Changeover in Estonia
www.kaupmeesteliit.ee
� 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
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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
www.kaupmeesteliit.ee
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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
www.kaupmeesteliit.ee
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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
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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.
www.kaupmeesteliit.ee
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Dual circulation period
www.kaupmeesteliit.ee
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.
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Dual circulation period
www.kaupmeesteliit.ee
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.
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Display of prices in two currences
www.kaupmeesteliit.ee
� 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.
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Display of prices in two currences
www.kaupmeesteliit.ee
�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
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Rounding rules
www.kaupmeesteliit.ee
� 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.
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Exchange of kroon cash into euro
www.kaupmeesteliit.ee
Cash exchange took place through
the following official channels:
� Bank branches
� Automated teller machines (ATM)
� Retailing
� post offices
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www.kaupmeesteliit.ee
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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www.kaupmeesteliit.ee
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)
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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
www.kaupmeesteliit.ee
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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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www.kaupmeesteliit.ee
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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www.kaupmeesteliit.ee
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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www.kaupmeesteliit.ee
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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www.kaupmeesteliit.ee
Consumer price index
Source: Statistikaamet
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www.kaupmeesteliit.ee
Customers,
retailers:
� be patient,
� be careful,
� be reasonable,
� be understanding,
� just do your best!
Good luck!
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www.eiro.lv
http://www.euro.eesti.ee
www.kaupmeesteliit.ee
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Thank you!
Estonian Traders´Association
Eesti Kaupmeeste Liit
www.kaupmeesteliit.ee
www.kaupmeesteliit.ee