Handling the adoption of the Euro, or other change of currency

At various times, countries change their currencies. This isn't something that Microsoft Money is designed for, but can cope with if you work it through.

For cash accounts, the measures are very simple. Create a new cash account in the new currency, and as and when you obtain the new currency coins and notes, use that account instead.

For bank accounts, this is slightly more tricky. It partly depends on the introduction of the new currency and how it is handled by your bank. If the bank is showing the old and new currencies on the same bank account, and is intending on not giving you a new account, then treat the situation as if you are getting a new account.

If you try to "dual price" your bank account, you're going to get into difficultly.

So, the general procedure is below (I'm using the example of Cyprus, who are adopting the Euro on 1st January 2008, but you can substitute in your own currencies instead as the procedure is the same):
  • Treat your Cyprus bank account as two accounts. One which deals with Cyprus Pounds (old currency) and one which deals with Euro (new currency).
  • For a while, you will receive your statement in dual currency. Whilst this is happening, up to 1 January 2008, treat the account as in Cyprus Pounds and always balance in that currency
  • From 1 January 2008, you will treat your bank account in Euro, and balance everything in Euro.
  • Make a transfer on 1 January 2008 from the Cypriot account to Euro account (or treat as two transactions, but make sure they are on the same day) of the balance in the Cypriot account on that date, effectively zeroing it out. Because some currency conversion will occur here, check against your statement for the value
  • Next balance the account and close it.
  • As standing orders and direct debits start being scheduled after the conversion date, change or recreate them using the same category etc, but for the 'new' bank account and the 'new' currency (there will be a period of stability before the introduction of the new currency, which should give you a reasonably accurate figure of what their value is in the new currency)
  • By the time 1st January 2008 occurs, there shouldn't be any scheduled bills for the old Cyprus Pounds currency left, as all scheduled bills will be for the new one.
Balancing is going to be an issue, especially if your statement date doesn't fall on 1 January, as parts of it will be in Cyprus Pounds and other parts in Euro. However, if you apportion the amounts, and the statement is dual priced, you should be okay - it would mean balancing twice from the same statement and doing some math to work out. Alternatively, use the statement date as the 'changeover' date instead of 1 January - this makes balancing easier.

Category: Accounts

Keywords: Coins, Euro, Cyprus, Balance, Direct Debit, Standing Order, Currency

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