When Europe adopts a single currency-the euro-next January, companies will be freed from foreign-exchange costs and will reap huge financial rewards. Or so goes the hype, at any rate. What's little talked about is the cost of adopting the new currency.

A cost of $150 billion
In France alone, banks will have to convert 24,500 automated teller machines to spit out the new bills while still accepting the franc until national currencies are phased out on Jan. 1, 2002. Countries like Italy, where even the cheapest of items sell for hundreds of lire, will for the first time have to grapple with a currency that is worth enough to be divided into cents. (The euro is expected to be valued at more than a dollar. That means computers and cash registers will have to be modified to handle decimals.) Across the Continent, companies will have to modify payment and accounting systems, rewrite software, and revamp every cash register, credit card terminal, or other machine that deals with money. One example: Selecta Group, a Zug, Switzerland, company that maintains 17,000 food-vending machines throughout the Continent, will have to spend $100 each to convert them to accept the new euro coins and notes.

At $100 a shot, those costs add up quickly. John Downe, IBM Europe's executive in charge of Economic and Monetary Union, estimates the total cost across all sectors and all countries at a staggering $150 billion. François Charrière of Andersen Consulting in Paris estimates companies will have to fork out a chunk of operating costs over three years-anything from about 0.5%, for industrial conglomerates, to 2%, for banks. French steelmaker Usinor estimates the cost far higher-about 10% of one year's profit.

Who are the winners?
Where's all this money going? Only about 30% to 40% will be spent on adapting technology to handle the single currency (maybe slightly more for banks). An additional 30% to 40% will go toward training employees to handle the conversion, while the remainder will be spent on general consulting and restructuring fees.

But as always, one person's problem is somebody else's opportunity. Information technology experts who will help convert Computer systems are commanding hefty premiums. "We've heard of companies designing specific bonuses to retain their key staff until 2001, and the salaries of IT staff in London's City are already really increasing," says IBM's Downe. Another potential winner.: credit card companies, which are banking on increased use of plastic money while consumers get used to the euro. "Living in Europe will be a bit like being on holiday in a foreign country, which is typically the situation in which you like to use your credit card," says Steven Perry, chief financial officer of Visa International. And naturally, there are the consultants who will earn big bucks advising companies on how to adapt to the new currency. James McGuire, a managing partner at KFMG in New York, estimates that such business will add $70 million to $140 million in revenue to the $700 million the consulting concern already earns annually in Europe. No wonder KPMG has been trying to draw attention to EMU's costs.

"Too many [companies] look upon EMU favorably while ignoring its likely impact on immediate profitability," says a recent KPMG Management Consulting survey ."Too many have failed to estimate the costs of adapting." KPMG may be keeping an eye on the euro, but it's seeing dollar signs.