We were, secretly, hoping for a disaster. We were, don’t tell anyone, wishing the computers to fail, hoping the spreadsheets blew up as the conversion turned D-marks into rubbish rather than into euros.
The UK may have declined its invitation to the party, but the launch of the euro was a titanic event in the City all the same. The average daily turnover in London’s foreign exchange market is $637 billion a day, the equivalent of annual UK GDP, so traders and analysts opened their systems on Monday morning with more than the usual trepidation.
On 31 December the European Commission fixed the euro conversion rate at $1.2 and le weekend began. While the rest of the world saw in the final year of the millennium, 30,000 workers in 600 banks and financial institutions worked through their holiday to ensure that 11 currencies could go into one without any serious technological mishap. It was probably the most complex single adventure ever embarked on in financial markets, and creates what could soon be the world’s largest capital market.
By Sunday evening the technical departments exuded confidence. Most banks in London claimed to have completed their preparations ahead of schedule. The great information banks at Reuters and Datastream reported that they were ready for the launch. The Bank of England’s helpline had received no callers and the European Central Bank said nothing had happened to impair the systems. The two securities depositories, Cedel and Euroclear, which handle the clearing of most international bonds, declared their insouciance.
As we arrived for work in the early hours of Monday morning, those of us suspicious of computers longed for the screens to go blank and the City’s increased reliance on technology to be shaken. As it was, this disaster never happened. Activity was slow, as traders had to accustom themselves to the odd new exchange rates and peculiar stock prices, but there was no apocalypse. Trading in London was half the normal level and trading in the D-mark all but disappeared. The only technical glitch was that the ECB’s payments system had to put back its closing time by an hour and a half.
True enough, the European markets went haywire. In Frankfurt the X-DAX rose 5.7 per cent. In Paris the CAC 40 rose 5.2 per cent and the Mib-30 in Milan was up 6.4 per cent. The yield on the ten-year bund fell to 3.76 per cent, which means that the German government is now paying the lowest rate of interest on its debt since the foundation of the Federal Republic.
But in London, Dull Monday was the first consequence of the UK’s absence from the euro. It was a day so catastrophically boring that FTSE ended the day only 3 points down, a move of less than 1 per cent. This was a day that demonstrates the dual meaning of occupation: just sitting there, occupying a space for a living.
Le weekend, though, was not about strategists, economists or analysts. It was about the technical support staff. New Year 1999 was the techie’s Woodstock. Free taxis, free sandwiches and rooms in plush hotels, all for doing what they love to do anyway, which is to mess about with machines.
In a famous passage George Orwell once wrote about the miners buried underground amid intolerable conditions: the whole of civilisation, he claimed, depends upon their labour. The technical support staff are the City’s miners and it is difficult to exaggerate the extent of our reliance on the underground colliers.
In an infamous part of the same passage Orwell also said that the working classes smelled and that was one way you could tell who they were. It would be wrong, not to say rude, to say that the technical staff smell. There is, though, an unvarying distinction between the analysts and the computer staff, between what they call, with fine Victorian sensibility, the front and the back offices. It is all in the pockets on their shirts. Technical staff invariably offend City conventions that shirts should not have pockets, that they should have double cuffs with cufflinks and that they should have a hard collar. Technical staff walk around brazenly in shirts with buttons on their collars and cuffs, and pockets on their left breasts. Often they will add to the problem by growing moustaches, even beards.
Le weekend, then, was a triumph for the men with facial hair and pockets on their shirts. But it may not be over yet. Banks may well find that their cash is not flowing to the right places. Until now, payments denominated in D-marks would have gone to Frankfurt automatically; euro payments, instead, could end up in one of 18 different payment systems.
It is just possible that fund managers who thought they owned French luxury goods companies are left with a bundle of Portuguese metal-bashers at prices they don’t recognise in some incomprehensible currency. For those of us who know the computers are malign, there is hope yet.
Phil Collins works for Dresdner Kleinwort Benson