Dáil Éireann díospóireacht -
Wednesday, 27 Jun 2001

Vol. 539 No. 2

Written Answers. - Euro Changeover.

Michael Bell

Ceist:

22 Mr. Bell asked the Minister for Finance the total anticipated cost to the Exchequer of the changeover to the euro at the latest date for which figures are available; if it is intended to pay a subsidy to the banks in return for their not charging cash handling fees for retailers; the estimated cost of such a subsidy; if he considers that such a subsidy is justified having regard to the profits being made by the banks; and if he will make a statement on the matter. [19035/01]

Minister for Finance (Mr. McCreevy)

From estimates supplied to my Department in respect of the Central Bank of Ireland, Departments and relevant bodies as at May 2002, the cost to the Exchequer of the changeover to the euro is estimated to be of the order of £100 million. Changeover costs are of course once-off, whereas economic and monetary union confers ongoing benefits.

As regards the second part of the Deputy's question, I published Ireland's Cash Changeover Plan for 2002 in April 2000. An important part of the plan is that while retailers will continue to accept Irish cash up to 9 February 2002, they will from 1 January 2002 charge in euro and give change only in euro. To do this, they will have to get euro cash from banks in advance of 1 January 2002, and will have to lodge all of the Irish cash they receive inwards during the dual circulation period.

Retail representative organisations identified bank cash handling charges as a potential obstacle to retailers doing this. Retailers were concerned that they would have to pay bank cash handling charges for the euro cash that they will need to get in advance of January 2002, and cash lodgement charges on the Irish cash they will be lodging with their banks during the dual circulation period.

Accordingly, I announced in Dáil Éireann on 8 May that, in order to facilitate the changeover process envisaged by the plan, agreement was reached with the banks by the Euro Changeover Board of Ireland and the Central Bank of Ireland whereby banks will not charge cash handling charges on euro cash provided to retailers in advance of 1 January 2002; and will not charge cash lodgement charges on Irish notes and coins lodged by retailers during the dual circulation period and for a short time afterwards – that is, from 1 January 2002 until the end of the week after legal tender status is withdrawn from Irish notes and coins, that is 15 February 2002.

In return for this waiver, the Central Bank will, during the dual circulation period and for a short period afterwards, provide the banks with a lodgement fee for Irish notes and coins that it receives from them. I do not consider the measure to be a subsidy to banks: rather it is a measure to meet – in part only – the income that the banks would otherwise recover from retailers in cash handling charges. The cost is estimated at between £5 million and £6 million. Banks will of course be meeting their own costs in the changeover.