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The Rush to euro on e-day in Germany: arguing for frontloading consumers with euro notes ahead of e-day

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This paper attempts to make informed forecasts on the capacity to supply German consumers with Euro cash on E-Day and beyond. The capacity to supply major parts of the German population with the new currency on E-Day and thereafter seems to be theoretically available. However, the authorsÂ’ calculations show that even under the best conditions (i.e. no software problems, sufficient money in the ATMs, etc...) the operation should be assumed to take a few days. This is essentially due to demand constraints, pertaining to the fact that German consumers cannot be expected to all radically change their cash retrieval behaviour. If they extrapolate currently observed cash retrieval behaviors in the population, the demand will not be sufficient, with just a mere 6.5 per cent of the population above 15 years currently retrieving cash per day. So one of the goals for a smooth changeover will be to stimulate enough extra demand for Euro cash and drive the population to the ATMs. Generating the extra demand may be especially difficult in Germany due to the relatively negative attitude of Germans to the Euro. Consultations made during a related study in the Netherlands, in the city of Lelystad, would appear to negate the possibility that six to eight times the number of customers will turn to their ATMs on E-Day. This is the behaviour that needs to be induced for rapidly inducing a sufficient concentration of Euro-payers in the population. Unfortunately, the problem is more complicated. Should an intensive communication to consumers about their crucial role in the changeover be successful, then one could generate another undesirable scenario: too many customers responding to the call for Euro cash, only to join long lines in front of the ATMs, or in front of the cash desks at banks. The challenge for the involved parties in the Euro project face would seem to be twofold. The first problem is to get the people to the ATMs. And the second problem is to make sure that there is no crowding at the ATMs. People have to be urged to the ATMs, but not too much. The authors do not immediately see how credit institutions will manage this delicate scenario. In particular, given the many possible scenarios that may need to be managed, they do not see how these institutions can avoid opening their branches on E-Day. Finally, their calculations point to another road to a smooth changeover, especially in the German "big bang" scenario. Their study reveals that there are indeed opportunities to supply 50 per cent of the customers on E-Day, but only if demand is both high enough and widely spread over the day. The required consumer behavior seems to be highly unlikely to be realised. However, with proper inducements, ATM capacity might be sufficient to load consumers quickly with the new Euro currency as long as the loading is initiated a few days before E-day. Frontloading consumers with small denomination Euro notes a few days before E-day would seem to be a prudent and feasible alternative to the currently envisaged big-bang scenario and no frontloading of notes. It would appear to be the most effective way to manage the multiple risks needlessly induced by the current scenario.

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