Paul Abraham, country manager (transactional banking) at ABN Amro Bank, did not rule out Switzerland joining the EMU between 2002-2005. Abraham, who was speaking on ``Euro and its Implications for India'' at a seminar oranised by the western region of the CII in collaboration with the Exim Bank and ABN Amro Bank, said the business implications of the euro would lead to price standardisation within the euro zone. It could also lead to relocation of production facilities -- in all probability to Spain -- where the cost of production is lower, and centralise cash management to effect economies of scale.

He stressed the need for Indian companies to become euro-compliant since increasinglyEurope-centric corporates are looking for partners who are changing over to the euro. The single currency will help save cross-currency changes. Abraham added that the Reserve Bank of India and the Fedai have set up a committee to ensure that there is a direct linkage between the rupee and the euro. At present, the rupee is quoted against the dollar and then changed into the deutsche mark or franc. Countries like India stand to benefit.

ABN Amro's view of cash management for corporates in the EMU envisages providing access to a large and liquid money market, even as they reduce borrowing costs and increase investment returns. The euro will also help in forex management with the elimination of risks and conversion costs within the zone and using it for external EMU-trade.

The three currencies -- the US dollar, the euro and the yen -- could see Asean countries also unite to form a third common currency, leading to three broad economic zones.

The changeover caused by Y2K compliance is coinciding with theconversion of 11 national European currencies to the ``euro'', thus opening up a vast business potential for software companies. One estimate by the Gartner group puts the euro conversion business at $100 billion while the European Banking Federation has estimated the conversion costs for banks at $20-24 billion and $8 billion for the insurance sector.

The changeover to a unified currency, which begins from January 1, 1999, has meant that attention of European countries has been diverted from compliance with the Y2K, resulting in western Europe falling behind in both Y2K compliance and euro conversion. One estimate is that 60 per cent of the western Europe will not achieve Y2K compliance by 2000 and efforts to achieve this will go on till 2003 while the euro conversion, which involves doing away with national currencies by July 2002, will go on till 2005, said AK Gupta, general manager at International Computers India Ltd.

Gupta, who was speaking on the infotech issues related to the euro, said theconversion would have be dealt with at two levels: First, to a dual currency, and second, switchover to the euro. Indian software companies have already begun work in this area and found off-site development to be more cost-effective. The euro conversion would also lead to the creation of software powers in Russia, the Czech Republic and the Ukraine, which have large surpluses of software personnel.