Producing euros is only part of the cost facing banks

FRANKFURT, Germany (CNN) -- Changing to the euro will not be without its costs.

According to the European Central Bank, the total price tag has been estimated as high as 50 billion euros, or 0.8 percent of the eurozone’s 6.5 trillion euro gross domestic product.

Other estimates put the tab closer to 20 billion euros, or less than half of 1 percent of the area's GDP. Either way, it's a big bill -- most of which will fall to eurozone retailers and banks.

Central banks will bear the brunt of the expense of producing and distributing 50 billion new coins and 14.5 billion new notes, as well as collecting and disposing of the old ones.

In Germany, Europe's largest economy, the central Bundesbank will collect up to 2.6 billion notes, as well as 8 million German coins weighing 100,000 tons. The bank will replace them with 71,500 tons of euro coins and 2.5 billion euro notes.

Changes to internal banking systems and information technology will cost European banks about 10 billion euros, says Patrick Poncelet, senior adviser at the Banking Federation of the EU.

Just in Germany, each of the country's 46,000 bank branches has to spend about 71,000 on the switch -- a total of 3.4 billion euros.

Banks across the continent are cancelling holidays between November and February so staff will be available to deal with the huge workload.

One of the hidden costs of switching to the euro is the "piggy bank problem" -- the countless number of small-value coins stored in bottles, desk drawers and piggy banks.

The Federal Association of German Banks estimates that each German holds 100 coins in such containers, and huge queues are expected at banks in a rush to convert the soon-to-be-useless cash into euros.

Altogether, 40 percent of Germany's 48.5 billion coins now in circulation are regarded as irretrievably lost -- either down the backs of sofas, used as decorations or thrown into fountains.

In fact, the association has a tip for Europeans stuck with old national bills and coins: Use them to buy wine.

“Any left over drachma, pesetas or lire? Invest all coins above all in retsina, chianti or rioja,” the group advises.

While wine merchants and overworked bank tellers may be grateful for such advice, many retailers will find the switch to the euro comes with a price.

Merchandise will have to be priced in euros, and stores will have to post dual prices for a time. Although the euro will be legal currency from January 1, 2002, many of the 12 national currencies will still be legal tender until the end of February.

Other groups facing costs include vending machine makers and operators, who will have to reconfigure or replace some 3.5 million machines.

Although Britain is staying out of the euro for now, 10 billion coins pass through that country's amusement machines each year, and the British Amusement Catering Trades Association estimates a switch to the euro would cost £244 million.

Likewise, the UK's automatic vending machines association says it would cost another £83 million to change its members' machines.

One casualty of the single currency could be the many bureaux de change dotted throughout Europe.

A Spanish currency trader who spoke to CNN predicted that almost all of that country's 6,000 storefront exchange shops would close.

ECB spokesman Niels Bunemann downplayed the costs to currency changers and other businesses, instead pointing to the money tourists will save when buying foreign currencies when they travel, and when making purchases in general.

It is believed that as prices become easier to compare across borders, manufacturers and retailers will face pressure to cut prices.

Bunemann also points out that many of the costs facing banks and retailers have been spread out since 1994, when preparations for the single currency began following the signing of the Maastricht Treaty.

Also, many costs -- such as producing new currencies and refitting vending machines -- would have occurred even without the euro, he says. New coins and notes are needed every so often to replace older ones and to maintain the battle against increasingly sophisticated counterfeiters.

Even currency exchangers won't be completely out of luck, Bunemann says. Britain, Sweden and Denmark are retaining their currencies, and U.S. travellers will still come to Europe armed with dollars.

Currency handlers also will benefit as Eastern European nations continue their move to market economies, and more hard cash comes onto the market.

One clear winner from the changeover will be charities, many of which plan to organise collections of unwanted coins to raise money for the underprivileged.

"We are working on it, as are other charities," said a spokesman for UNICEF. "We are in negotiations with global groups who organise such collections at the moment.”

Coin collectors also stand to benefit.

Barry Clayden, a London coin dealer, says he expects a surge in collecting as people become get caught up in nostalgia for disappearing national symbols.

“On the unification of East and West Germany there was a tremendous surge of demand worldwide for old East German coins,” he said.

So what is his advice on those coins in the piggy banks?

“People should ... look at their coins and if they have good high-quality examples, sit on them for a while," Clayden says. "They will be of value in the years to come.”