Abstract:

The introduction of the Euro will create a single currency area with about the size and the economic power of the United States. Beginning 1 January 1999 the Euro is the sole currency for all eleven countries participating in the European Monetary Union (EMU). Of course there will be a an official exchange rate for each of the eleven currencies. A possible solution for the pricing problem could therefore be to multiply all prices with this single factor. But this would not be an adequate solution. Two problems in particular are addressed: how to handle price differences between different countries; and how to handle price thresholds