Euro Big Bang
emu
At the start of next year, Europe's financial markets will switch to the euro in the
first wave of EU monetary union. So, too, will our internat books and systems, as
well as the accounts of many of our top customers. Thus, when monetary and
financial authorities in Brussels publish the official table of conversion rates just
after midday on 31 December, they will trigger an unprecedented scramble
among banks to redenominate their securities portfolios, convert cash balances,
adjust internal systems, accounting procedures and so forth.
Historie transition
No party
Dress rehearsal
Hardly hiccups
Fine-tuning
i8 What'sNewS Issue 12-December 1998 m
Although other
elements of the
transition have been
meticulously planned,
the actual conversion
procedure cannot
begin until these rates
are set. This is because
the Maastricht treaty
stipulates that one
euro must be equal in
value to that of the
existing ECU currency
unit. However, some
ECU participants like
Denmark, England
and Greece will not
initially be shifting
over to the euro monetary union. Hence,
the value of their currencies is
unaffected by the fixing of bilateral rates
among euro participants which took
place earlier this year - they are still
floating - and final conversion rates
cannot be settled until the last business
day of the year.
For this reason, the euro conversion will
be a 'Big Bang' in the truest sense of the
term. Everything has to be done in a
complex and rapid sequence - and the
effort will test our procedures to the full
under circumstances of extreme pressure.
At Rl, considerable investments in time
and money have already been made to
ensure our systems and our people are
prepared for this historie and profoundly
challenging transition. 'It is imperative
that we do everything right,' says Rob
Niesert, euro project manager for the
Netherlands branch. 'No trouble has
been spared to ensure a faultless
conversion. After all, our credibility as a
All smiles during the euro conversion dress rehearsal
banking partner is at stake; already, over
a third of our corporate clients have
opted for an immediate conversion,
rather than wait until January 2002.'
Thus, when official currency exchange
rates are announced on New Years' Eve,
the atmosphere at the Netherlands
branch is unlikely to bear any
resemblance to an ordinary holiday
weekend; over 200 people will be
working around the clock, having
already sacrificed many weekends and
holidays to prepare not only for the
euro issue but also the regular year-end
accounting tasks that need to be carried
out as well. In principle, of course, all of
the players know exactly what needs to
be done once the actual conversion rates
have been set. But the key question is
how closely this theory will be borne
out in actual fact - and this is a
question of special urgency because the
conversion is a once-in-a-lifetime event
with no second chances for success.
Understandably, the tempo of
preparatory activity has been quickening
in recent weeks. During the recent 'euro
countdown weekend' - the weekend of
12-15 November - over 130 Dutch-
based Rabobankers front operations and
IT converged in Utrecht to conduct a
live test simulation of the real Big Bang,
which will run from 31 December
through the start of business on 4
January 1999. This countdown weekend
coincided with similar exercises at our
branch in Luxembourg and at Rabo
Securities in Amsterdam, which in turn m
coordinated its simulation with a larger™
test run by the Amsterdam Stock
Exchange. As the final, full-scale dress
rehearsal, the countdown weekend
offered an unambiguous test of our
actual readiness for the forthcoming
event. It gave us a chance to scrutinize
every aspect of our systems and conver
sion procedures as well as to examine
the effectiveness of our extensive
contingency plans. 'We tested everything
we could,' says Niesert. 'For the first
time, our people were directly engaged
in a hands-on experience that gave them
a genuine sense of what they can expect
when the conversion weekend really
takes place.'
The verdict? Generally positive. 'Five of^|
our seven key systems - Atlas, Eximbills,
OMR, Powerdealer, Devon, Autodealing
and GRIB - were tested in the live
simulation. They proved themselves
capable of handling the conversion
without serious hiccups. In fact, it was
the human element that proved in some
ways more complex. Our experience
highlighted the crucial importance of
having clear lines of communication,
distinct role definitions, and a thorough
understanding of the complex and
highly-detailed conversion sequences,'
Niesert says.
'People naturally knew that the euro was
coming, but it was a pretty theoretical
understanding,' confirms Lida
Wagensveld, of back office financial ^j|
markets, who is deeply involved in the
effort to match our systems to those of
the Amsterdam Stock Exchange. 'It's one
thing to read plans on paper but
