31 December 2001

Tomorrow the euro banknotes and coins will enter into circulation. This is a unique moment in the world and in the European monetary history. Twelve countries renounce their monetary symbols and share sovereignty in such a relevant domain. In a globalised world, the euro will enable the European Union and its participating Member States to better control their own destiny. The European unity project becomes now particularly strengthened. The existence of a single currency is a key factor to guarantee the peace and prosperity of a continent, which suffered in the past the torments of wars and conflicts.

The euro will change Europe and it has changed Portugal. The preparations for participation in the euro took a decade and involved two governments, to whose converging activity I would like to pay tribute today. There was foresight and discipline in the accomplishment of the strategy. The country meets its obligations when it has clear objectives and well-defined targets. This decade witnessed a first adjustment stage in which inflation was brought down to European levels and a second stage in which we have already enjoyed the benefits of a new low inflation regime. It was also a decade in which the Portuguese financial system gained increased strength and saw a modernisation. Without our participation in the euro there would not have been room for the structural fall in interest rates, which paved the way for thousands of households to have access to credit and to a wide range of durable consumer goods, thus improving their standard of living. Likewise, companies also started to benefit from lower financial charges and, with the lower cost of capital, they could more easily invest and modernise themselves. History will record the changes undertaken by the country in the last decade as extraordinary and it will also report the impressive improvement recorded in the standard of living in such a short period.

Like any good currency, the euro has thus two sides: the one that makes us benefit from low inflation and low interest rates and the demanding side, which imposes discipline in the income policy and financial responsibility in the fiscal policy. We cannot ignore the new operating rules imposed by the euro.

The lowest cost is the one related to the adjustment that needs to be currently made to a new currency unit. Getting used to a new currency is what our emigrants usually do, without great difficulty, as well as all those who have had the opportunity of travelling abroad. We shall not therefore exaggerate the effort that we shall have to make to get used to the new monetary species.

For a period of two months, i.e. until the end of February, banknotes and coins denominated in escudos will continue to be legal tender. Afterwards, the escudo will forever cease to circulate; it will be possible however to exchange escudo banknotes at banks until June and at the Banco de Portugal during the next twenty years. Banknotes shall preferably be exchanged at banks. All ATMs will start to dispense only euro banknotes at the end of four days. There is no need to rush or to be afraid of not being prepared in the first day. During the first days, mixed payments should be avoided, i.e. the payment of an amount partly in euro and partly in escudo. As far as possible, payments of small amounts should be made using the exact money. Retailers shall endeavour to give the exchange only in euro. These are some simple rules for a smooth and effective changeover.

Let me take this opportunity to extend my thanks to the trade and banking sectors for the excellent co-operation given to all the preparation process of this huge logistic operation. The country is counting on both sectors to contribute to a smooth physical introduction of the euro. I would also like to thank the media for the excellent work they have done in the disclosure of all the aspects related to the introduction of the new banknotes and coins. Along with the remarkable work of Comissão Nacional do Euro, and without the effort of the media, the population would not have been as prepared as it is today.

Every detail was planned with the required lead time and care. The dual circulation period will enable a smooth adjustment. With serenity, we are going to overcome the remaining resistance and difficulties associated with the entry into circulation of the new currency, so that we can build a better future for the new generations.