LEGAL AND COST ASPECTS OF THE EURO INTRODUCTION INTO THE PAYMENT SYSTEMS OF THE NEW MEMBER STATES

Abstract

Full participation in the third stage of the Economic and Monetary Union (EMU) and introduction of the euro into the cash circulation opens new opportunities for economic development. However, it requires the economy to meet some economic and legal conditions. Institutions of financial, non-financial, and public sectors are required to adjust their operations to the legal regulations of the European Union and a modified domestic law. All institutions are required to implement rules based on the introduction of the new currency into business reporting, taxation and budgetary transactions. These activities generate some operational costs, which in the irregular model are borne by business institutions. The source of the highest operational cost is the modification of the information technology system. However, the costs of adoption of the euro are mostly applied to the banking sector. Apart from the IT modernization costs, significant costs are associated with the necessity of supplying and storing the euro currency and withdrawal of the domestic currency. For this purpose, banks have to train a high number of cashiers. Additionally, an increase of employees within the cash units can be noticed in the periods of dual currency. For the public sector the highest euro adoption costs are associated with the modernization of IT systems used for taxation settlements, social security and duties settlements and others, and for the public information campaign, which is targeted to senior citizens to present some practical aspects of the euro introduction.