Channel fails to gain from single currency

The euro is starting to yield results, but its full promise for the channel remains unrealised.

The euro is starting to yield results, but its full promise for the channel remains unrealised.

Since the launch of the pan-European currency on 1 January last year, some channel companies have seen tangible financial benefits, including reduced costs associated with transactions and less time spent dealing in multiple currencies.

But the larger gains - uniform pricing, free flow of assets and unfettered cross-border trading - have yet to materialise.

Bill Hunter, vice-president of finance for Europe at Computer 2000, said: "The euro has simplified aspects of our business. In the end, we'll have more efficient markets. We're not there yet, partly because the euro is not yet fully implemented. People still treat it as a special foreign currency."

Erik Smolders, European treasurer at distributor Ingram Micro agreed.

He said: "By 2002, everyone will have to switch over to the euro. The big bang is still to come."

But smaller resellers and their customers continue to deal in national currencies. Less than one per cent of Ingram's accounts have switched to the euro, Smolders said, whereas many of its US-based vendors, including IBM, Compaq and Hewlett Packard, operate continent-wide and have switched to euro-only.

The euro has eliminated conversion costs and risks associated with exchange-rate fluctuations. It has also enabled faster cash flow.

In addition, the euro has reduced differences in prices from one country to another. Angus Hislop, director of banking practice at PricewaterhouseCoopers, said: "We are starting to see uniformity in pricing. The euro makes price comparisons easier."