perspective

"LIVING PERSPECTIVE"

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A Digest of Information to let you see how the Current Events fit into Biblical Prophecy
Information Supplied and Edited by Dr. Douglas Winnail.
If it comes from another source, initials will be behind the article on who posted it.

Are you ready for the introduction of the single currency in Europe?

On the 1st January 1999, stage 3 of Economic and Monetary Union (EMU) starts. This stage is characterised by the introduction of the single currency; the Euro. On January 1st, 11 European countries will lock their currencies together to form the new single currency for Europe. These countries include:

Countries participating in EMU Austria Belgium Finland France Germany Italy Ireland Luxembourg Netherlands Portugal Spain

The national legacy currencies of participating members will no longer exist in their own right, but will be fixed by a conversion rate against the Euro. There will no longer be any foreign exchange rates to complicate cross-border trade and, in effect, they will create a huge trading zone, known as Euroland. Within this zone goods and services will be bought and sold in one currency.

It is easy to think that here in the UK we do not have to worry about it, because it's just another currency. That is simply not true. If you trade with any of the countries entering in to EMU then you will be impacted on day one. Also, you may be affected by UK based companies moving to operate in the Euro despite the fact that the UK will not be adopting the Euro.

Impacts for the Import and Export sector

All new contracts made with counterparties in Euroland will be in the new currency, and existing contracts will be a mixture, some will redenomiate to the new currency whilst others will remain in the old national legacy currencies. Every European, including you and I, has the freedom to accept payment or make payment in the national legacy currency that a contract was previously denominated in for the next 3 years. Some European suppliers and customers may want to operate in the Euro, whilst others may prefer to stay in the national legacy currency until their accounts systems have been converted to use the Euro. In this way, the national legacy currencies and the Euro are interchangeable and will remain so until the old currencies are no longer legal tender in July 2002.

This means that you will have to have the ability to accept both forms of transaction until 2002, but it gets more complicated, because to convert your Sterling to French Francs say, you will first have to convert it to the Euro. This is because the national legacy currency will no longer exist in its own right but will be a denomination of the Euro, fixed by the conversion rate. This process is known as triangulation and every treasury department and computer system that calculates exchange rates must be able to operate in this way.

Furthermore, there are strict guidelines for the conversion of national legacy currencies into the Euro. For example, calculations during conversion must be carried out to six significant figures and must not be truncated, the Euro must be displayed to two decimal places and rounded up if a calculation is 0.005 or more and rounded down if less.

Every organisation that trades with Euroland countries must investigate the impacts the new single currency will bring to them. They have to ask themselves; How do our customers want to pay us ? How do our suppliers want us to pay them ? Can our accounts systems cope with the Euro and national legacy currencies ? Has our bank set up a Euro account for us ? Do we want to consolidate our European accounts into one Euro denominated account and link all of our other European accounts to it ? etc.

Impacts on the UK's Deomestic markets

If you do not operate in the export or import sector then you may be inclined to think that you do not have to worry. This, however, is not the case because inevitably the UK's domestic economy will also be impacted by the introduction of the Euro in January 1999. ICI, Rover, Shell UK, British Steel and Unilever are amongst the companies that will report in the Euro, pay their suppliers in it and will consider redenominating their capital share value in to the Euro on the London Stock Exchange. They are making statements like we prefer to pay our suppliers in Euros, intimating that those suppliers that can accept the Euro will be preferred suppliers.

Their move to operate in this way will put pressure on the domestic supply chain. In order to continue working with them, and continue to survive, suppliers must be able to quote and receive payment in the Euro. In effect, the big boys are passing the currency risk down the supply chain.

In the current economic climate that will prove to be a major disadvantage to the smaller suppliers. Whilst the pound is overvalued it means UK suppliers' prices will be higher than those of other Europeans taking part in EMU and if companies are operating in the Euro they will have no foreign exchange risk and no fees for converting their money. Competition will be intense and UK businesses will face a new enemy from within.

So, should UK businesses move to operate in the Euro ? They could then quote and pay in the Euro, pay their staff in the Euro (hence they take the currency risk), pay their taxes in it and redenominate their capital share value in to the Euro. This would be a truly pro-European approach, an embracement of EMU and an outward, gushy display of our Euorpeaness. In the present time it would certainly lead to business advantage, at least if you predominately supply companies who move to operate in the Euro or you are active in the European market.

But what if the pound falls in value or like most companies the majority of your trade is undertaken with companies not moving to the Euro and who prefer Sterling ? Moving to the Euro would then prove to be a major disadvantage. Worse still, what if you have a mixed customer base; some Euro, some Sterling ? Damned if you do, damned if you don't springs to mind.

Managing the Impacts of the Euro

While the UK remains outside of EMU, UK companies will have to walk a tightrope. Treating the Euro as just another currency will not be enough, there will be times when this will lead to business disadvantage and a more complex strategy is required. Some companies might take advantage by setting up Euro accounts to reduce their currency exposure and spread the risk, operating on a dual basis, whilst keeping Sterling as their base currency. Others may try to change the markets in which they operate or set up separate, parallel Euro denominated companies or divisions to cope with all eventualities.

One thing for sure, is that failure to find out just what the impacts are will lead to business disadvantage for those that are not subsequently prepared. There are many businesses that will be impacted at this time and they must work towards being prepared during the rest of this year. This means writing to customers and suppliers and asking them to confirm their intentions and communicating their own, making arrangements with banks and asking them for more information and guidance, reviewing the terms and conditions of contracts and making sure that computer systems can cope.

Solutions will be varied and in the time-honoured traditions of survival of the fittest, many new ways to gain business advantage will emerge. Those that hang around and believe the Euro will be just another currency will have a shock. For some, the business disadvantage will be so great that they may face financial ruin.   (jw)
Euro-Information.com Page
Sterling after EMU,     / The Money Page
Look at the German Page and if you read a bit of German, look at this!

Euro Information

The World Trade Organizations
It's a matter of great concern to see the increasing propaganda for, and emergence of, a New World Order. Briefly put, beginning more than two thousand years ago both Old and New Testaments warned us that the culmination of history would be marked by the reunion of the nations of the old Roman Empire in Europe; the restoration of the state of Israel [and the increasing hostility of all nations toward her]; the implementation of a one-world governmental system; the imposition of a world-wide cashless monetary system; the development of a synchretistic world religion, based upon man, and presided over by a false prophet; the rise to power of a benign world dictator, who [once firmly in control] would eliminate individual freedoms, demonstrate iron-willed ferocity and cruelty, and make himself the object of worship; and world-wide apostacy, coupled with active persecution and execution of believing Jews and Christians. If you're interested, check for yourself in Ezekiel 38 and 39; Daniel 7; Zechariah 12-14; Matthew 24; 2 Thessalonians 4; and the Book of Revelation.

The phenomenal rise of the European Union, the amazing creation of the State of Israel, the increasing surrender of international authority and policing power to the U.N., recurrent and increasing currency and financial crises, and the gradual abandonment of the Biblical revelation on which Western civilisation was built, all give us due warning that very tough and delusive times are coming. We should be as skilled in reading the spiritual portents of the times in which we live as we are in reading the weather, and we should prepare accordingly. (jw)

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