Un interessante colloquio con il capo redattore del prestigioso settimanale economico "Kapital" concernente l'ingresso della nuova moneta europea e il suo impatto in Macedonia (testo in inglese).
The office of "Komercijalna Banka" bank located in the City Shopping Mall in Skopje is besieged. Huge lines of people wait, sometimes for more than seven hours, to get their share of quality time with the bank tellers. Outside, in the main city square, the holiday season is progressing exponentially. The people in line are getting increasingly nervous. They would like, after all, to do some last minute holiday shopping, just like everybody else. They curse at their tragic fate, they curse at the tellers, they curse themselves for not being diligent enough to come to the banks earlier this December when the crowds were comparatively smaller...
Yes, finally, the time has come to bid farewell to the German Mark and greet the new symbol of Europe - "united and free" as the old cliche goes - the Euro.
Goodbye to the German Mark
Macedonia prepared for the Euro well in advance. As a matter of fact, it was as prepared as any other country. The banks announced their procedures and possible actions to be taken by the citizens as early as June. The banks computerized at an accelerated rate and promised to be fully capable to answer all contingencies. However, the First Murphy's Law says that, "if anything can go wrong, it will go wrong." About the things that could have and did go wrong, we spoke with Ljupco Zikov, editor in chief of "Kapital" the leading business and economic weekly in the country.
"Macedonia was well prepared for the introduction of the Euro" he says, "and there will be no great difference from the situation before, when we were tied to the German Mark, as the second official currency in Macedonia, and for that matter elsewhere in the Balkans. Now, instead of the German Mark, we will do everything with the Euro, working on the same principle."
Indeed, Macedonia was the land of the German Mark. All the transactions were done in German Marks, the average salaries were counted in German Marks, and if you asked for a price in the retail store, or if you asked a friend how much did his nice basketball sneakers cost, he/she would answer in German Marks.
The problem, the "anything that could go wrong" of Murphy's Law, was purely technical. It happened so that the banks had to deal with two crowds at the same time, as a result of the coincidence of the reforms in the system of payments and the change from the Mark to the Euro. As Zikov puts it:
"It basically showed all the weaknesses of the system, whether we talk about the Government, the National Bank of Macedonia, the commercial banks, and finally, the citizens themselves sort of failed. It happened once again that we all waited for the last possible moment to go to the banks and complete the procedures for either the transfer of our firms' accounts from the Office of Payments (now defunct) to the commercial banks, or for transfer from German Marks into Euros. The two parallel reforms caused these huge crowds and long lines in the banks, and you will see a lot of people who will tell you that the introduction of the Euro caused the crowds. That is not true, at least the Euro is not the sole culprit."
That do-it-the-last-possible-minute approach has caused those huge crowds in the banks. Zikov believes that the Government failed to, basically, urge the people to do everything in a timely manner. However, Zikov thinks that finally, the Euro is to make everybody's life a bit easier.
The great Euro hype
"When you travel abroad, for instance, it would be much easier for you to go to the nearest bank here, change Denars into Euro, and travel wherever you go. Earlier, if you traveled to Spain, you had to change your money into German Marks, and then change them into Peseta in Spain. That caused you, I presume, lots of inconvenience in the past, not to mention the loss you suffered because of the exchange rates and exchange offices' commissions charge."Zikov also added that the Euro will make foreign trade much easier, since now all the countries in the region - which are traditionally our greatest markets - will be dependent on the Euro. We used to have a situation where the German Mark was the de facto currency in Bosnia, in Kosovo and in Montenegro. Now, the Euro will take that position and in Zikov's words: "the day that all the countries in the region decide to make the Euro their currency and drop the Kunas, Dinars, Denars or what-not is not all that far. That can only help these countries' ambitions to get into the European Union."
In addition to the more philosophical, if you want, advantages in terms of EU integration and such, the Macedonian economy had great hopes for the Euro. Practically all experts expected that the Euro would extract the currency reserves that Macedonian citizens keep at home. The amount of money kept in home safes, mattresses, pillows and old socks, is estimated at about one billion German Marks. The banks hoped to gather most of that money and channel it through the system. The economic experts believe that if the banks manage to do this, Macedonia might start the cycle of economic recovery without depending so much on foreign aid and assistance. So far, they have been proved right. Starting from mid-November, approximately six million German Marks in home savings were taken to the banks and put into savings accounts. However, Ljupco Zikov thinks, and it is hard not to agree, that this is only a short term situation.
"The truth is," he says, "that the Macedonian economy needs and has an absorption capacity far greater than the estimated one billion German Mark or so. However, the real problem in that regard would be for the banks to somehow assure people that it is better and worthwhile for the people to give their money to the banks for safekeeping. They will have to make that profitable, otherwise the people simply won't put their money in the banks. What I think will happen in a month or so, is we will have people going to the banks, taking out Euros or Dollars (or Swiss Franks for that matter), and stuffing their mattresses again."
It is easy to understand Zikov, since every country in transition did have at least one huge pyramid scheme and a couple of banks that went bankrupt and their clients lost their life savings. Add to it the recent security crisis - where lots of people took out their savings from the banks in order to have some currency available at any time and for every contingency. As it is, the banks in Macedonia have their work cut out for them.
And it will be tough. Over the last two weeks of December the German Mark's value to the Denar has fallen from the rate of 31.4 Denars per German Mark to 28.5 Denars per German Mark. It is rather easy to explain. Macedonian citizens rushed to the exchange offices in an attempt to exchange their German Marks for U.S. Dollars or even Denars, with the idea of changing them back into Euros eventually. However, the huge amount of Marks offered in the currency market caused the fall of its price. We are pretty sure that someone will make hefty profits when exchanging the German Marks into Euro later.
As we mentioned before, Macedonian banks were ready for the whole procedure. They planned to transfer the Companies' accounts by December 31, 2001, and private accounts by February 28, 2002. In order to try and attract as many clients as they could, they practically competed in lowering the fee they would charge for the conversion, finally reaching the point where all conversion that was to be completed by December 25 was free of banking commission. The coincidence of the banking system reforms we mentioned before and the Euro conversion will probably contribute to the prolongation of the whole procedure, but hopefully, Macedonia will completely turn to the Euro by the February 28, 2002 deadline.
Here come the bad guys
In spite of the fact that not many people are willing to talk about it, everybody is concerned about the Euro's security. We already heard about the concerns expressed in Brussels that Macedonia and Kosovo might be the places to originate the first counterfeited Euros. The European financial authorities are firm with their assurances that the Euro notes are safe against any attempt to forge them, but they should have learned not to underestimate the Balkans' criminals by now.
Another big problem, and it does not concern just Macedonia but the whole of the Balkans, not to mention the European Union itself, is the fact that according to all estimates, there are over 2 billion German Marks in the Balkans, most of it dirty money. The whole operation of conversion into Euro may turn into the greatest money laundering operation of all times. Macedonia for instance, does have Anti Money Laundering Law, but it will enter into force in March 2002. It seems that the banks will have to take that risk and worry about it later.
Regardless of anything, January 1, 2002 will mean a beginning of a whole new era. It is the holiday season and the spirit of good will is supposed to flow around. So, let's join that spirit and wish the Euro a very warm welcome.
Vedi anche:
Banca Nazionale della Macedonia
Dalla Bosnia: Aufwiedersehen caro marco...
Un interessante colloquio con il capo redattore del prestigioso settimanale economico "Kapital" concernente l'ingresso della nuova moneta europea e il suo impatto in Macedonia (testo in inglese).
The office of "Komercijalna Banka" bank located in the City Shopping Mall in Skopje is besieged. Huge lines of people wait, sometimes for more than seven hours, to get their share of quality time with the bank tellers. Outside, in the main city square, the holiday season is progressing exponentially. The people in line are getting increasingly nervous. They would like, after all, to do some last minute holiday shopping, just like everybody else. They curse at their tragic fate, they curse at the tellers, they curse themselves for not being diligent enough to come to the banks earlier this December when the crowds were comparatively smaller...
Yes, finally, the time has come to bid farewell to the German Mark and greet the new symbol of Europe - "united and free" as the old cliche goes - the Euro.
Goodbye to the German Mark
Macedonia prepared for the Euro well in advance. As a matter of fact, it was as prepared as any other country. The banks announced their procedures and possible actions to be taken by the citizens as early as June. The banks computerized at an accelerated rate and promised to be fully capable to answer all contingencies. However, the First Murphy's Law says that, "if anything can go wrong, it will go wrong." About the things that could have and did go wrong, we spoke with Ljupco Zikov, editor in chief of "Kapital" the leading business and economic weekly in the country.
"Macedonia was well prepared for the introduction of the Euro" he says, "and there will be no great difference from the situation before, when we were tied to the German Mark, as the second official currency in Macedonia, and for that matter elsewhere in the Balkans. Now, instead of the German Mark, we will do everything with the Euro, working on the same principle."
Indeed, Macedonia was the land of the German Mark. All the transactions were done in German Marks, the average salaries were counted in German Marks, and if you asked for a price in the retail store, or if you asked a friend how much did his nice basketball sneakers cost, he/she would answer in German Marks.
The problem, the "anything that could go wrong" of Murphy's Law, was purely technical. It happened so that the banks had to deal with two crowds at the same time, as a result of the coincidence of the reforms in the system of payments and the change from the Mark to the Euro. As Zikov puts it:
"It basically showed all the weaknesses of the system, whether we talk about the Government, the National Bank of Macedonia, the commercial banks, and finally, the citizens themselves sort of failed. It happened once again that we all waited for the last possible moment to go to the banks and complete the procedures for either the transfer of our firms' accounts from the Office of Payments (now defunct) to the commercial banks, or for transfer from German Marks into Euros. The two parallel reforms caused these huge crowds and long lines in the banks, and you will see a lot of people who will tell you that the introduction of the Euro caused the crowds. That is not true, at least the Euro is not the sole culprit."
That do-it-the-last-possible-minute approach has caused those huge crowds in the banks. Zikov believes that the Government failed to, basically, urge the people to do everything in a timely manner. However, Zikov thinks that finally, the Euro is to make everybody's life a bit easier.
The great Euro hype
"When you travel abroad, for instance, it would be much easier for you to go to the nearest bank here, change Denars into Euro, and travel wherever you go. Earlier, if you traveled to Spain, you had to change your money into German Marks, and then change them into Peseta in Spain. That caused you, I presume, lots of inconvenience in the past, not to mention the loss you suffered because of the exchange rates and exchange offices' commissions charge."Zikov also added that the Euro will make foreign trade much easier, since now all the countries in the region - which are traditionally our greatest markets - will be dependent on the Euro. We used to have a situation where the German Mark was the de facto currency in Bosnia, in Kosovo and in Montenegro. Now, the Euro will take that position and in Zikov's words: "the day that all the countries in the region decide to make the Euro their currency and drop the Kunas, Dinars, Denars or what-not is not all that far. That can only help these countries' ambitions to get into the European Union."
In addition to the more philosophical, if you want, advantages in terms of EU integration and such, the Macedonian economy had great hopes for the Euro. Practically all experts expected that the Euro would extract the currency reserves that Macedonian citizens keep at home. The amount of money kept in home safes, mattresses, pillows and old socks, is estimated at about one billion German Marks. The banks hoped to gather most of that money and channel it through the system. The economic experts believe that if the banks manage to do this, Macedonia might start the cycle of economic recovery without depending so much on foreign aid and assistance. So far, they have been proved right. Starting from mid-November, approximately six million German Marks in home savings were taken to the banks and put into savings accounts. However, Ljupco Zikov thinks, and it is hard not to agree, that this is only a short term situation.
"The truth is," he says, "that the Macedonian economy needs and has an absorption capacity far greater than the estimated one billion German Mark or so. However, the real problem in that regard would be for the banks to somehow assure people that it is better and worthwhile for the people to give their money to the banks for safekeeping. They will have to make that profitable, otherwise the people simply won't put their money in the banks. What I think will happen in a month or so, is we will have people going to the banks, taking out Euros or Dollars (or Swiss Franks for that matter), and stuffing their mattresses again."
It is easy to understand Zikov, since every country in transition did have at least one huge pyramid scheme and a couple of banks that went bankrupt and their clients lost their life savings. Add to it the recent security crisis - where lots of people took out their savings from the banks in order to have some currency available at any time and for every contingency. As it is, the banks in Macedonia have their work cut out for them.
And it will be tough. Over the last two weeks of December the German Mark's value to the Denar has fallen from the rate of 31.4 Denars per German Mark to 28.5 Denars per German Mark. It is rather easy to explain. Macedonian citizens rushed to the exchange offices in an attempt to exchange their German Marks for U.S. Dollars or even Denars, with the idea of changing them back into Euros eventually. However, the huge amount of Marks offered in the currency market caused the fall of its price. We are pretty sure that someone will make hefty profits when exchanging the German Marks into Euro later.
As we mentioned before, Macedonian banks were ready for the whole procedure. They planned to transfer the Companies' accounts by December 31, 2001, and private accounts by February 28, 2002. In order to try and attract as many clients as they could, they practically competed in lowering the fee they would charge for the conversion, finally reaching the point where all conversion that was to be completed by December 25 was free of banking commission. The coincidence of the banking system reforms we mentioned before and the Euro conversion will probably contribute to the prolongation of the whole procedure, but hopefully, Macedonia will completely turn to the Euro by the February 28, 2002 deadline.
Here come the bad guys
In spite of the fact that not many people are willing to talk about it, everybody is concerned about the Euro's security. We already heard about the concerns expressed in Brussels that Macedonia and Kosovo might be the places to originate the first counterfeited Euros. The European financial authorities are firm with their assurances that the Euro notes are safe against any attempt to forge them, but they should have learned not to underestimate the Balkans' criminals by now.
Another big problem, and it does not concern just Macedonia but the whole of the Balkans, not to mention the European Union itself, is the fact that according to all estimates, there are over 2 billion German Marks in the Balkans, most of it dirty money. The whole operation of conversion into Euro may turn into the greatest money laundering operation of all times. Macedonia for instance, does have Anti Money Laundering Law, but it will enter into force in March 2002. It seems that the banks will have to take that risk and worry about it later.
Regardless of anything, January 1, 2002 will mean a beginning of a whole new era. It is the holiday season and the spirit of good will is supposed to flow around. So, let's join that spirit and wish the Euro a very warm welcome.
Vedi anche:
Banca Nazionale della Macedonia
Dalla Bosnia: Aufwiedersehen caro marco...
