RBC Financial Group is offering tips on the impact of the debut of euro banknotes and coins, which will become the only official legal tender for the 12 European nations adopting the euro as of January 1, 2002.

John Johnston, chief economist (Americas) with RBC Capital Markets, says the switch to the euro is a positive thing for Canadians. “Creation of the single euro currency has created a very large and liquid capital market in Europe which offers Canadian investors a potential alternative to U.S. dollar investments,” said Johnston.

In addition, reducing 12 of the European currencies to one also makes life simpler for Canadians traveling and doing business in Europe because it means less time spent calculating exchange and converting currency. “We want to ensure that people are clear on all of the various cut-off dates and transition schedules for the new currency so that they are not inconvenienced down the line,” said Sam Bachand Potts, senior manager, travel products, RBC Royal Bank.

In most participating countries, the “dual circulation period” for both the euro and so called “legacy currencies” of the 12 countries adopting the euro will last between four weeks and two months. After that, the legacy currencies will disappear from circulation.

As of October 1, 2001 the preferred way of remitting money to any of these countries, in bank drafts or travelers’ cheques, has been in euro denominations. Any euro payment instruments negotiated for cash prior to January 1, 2002 can still be exchanged for the legacy currency of the country of the recipient.

Euro banknotes will not be made available to financial institutions around the world prior to January 1. From that date, Canadians will no longer be able to purchase the 12 legacy currencies, although RBC Royal Bank branches will continue to exchange old banknotes as long as the various central banks continue to accept them.