Transaction Currency Changeover (TR-TM-MM/FX/DE) 

Purpose

You can convert the transaction currency of financial transactions with due dates which fall within the dual currency phase (from 01/01/1999 to 01/01/2002) to the common euro currency. However, this is not mandatory.

By contrast, if the transaction due date falls after the dual currency phase, the changeover of the transaction currency is compulsory, since the participating currencies will no longer be valid after this period.

You change over the currency for individual transactions upon agreement with the business partners involved.

You can carry out the transaction currency changeover before or after the local currency changeover.

The report program for the transaction currency changeover also allows you to value the transactions at a fixed euro rate without actually carrying out the changeover. This is necessary when the transaction currency changeover is only carried out after the key date at which gains and losses resulting from the fixed euro translation have to be realized. For more information, refer to the section headed Valuation Without Conversion under Money Market

The following examples look at four different scenarios for the transaction currency changeover in the money market area:

1: Transaction currency changeover after the local currency changeover

LC = TC = DEM

TC changeover as at 01/01/2001

LC changeover as at 01/01/1999

 

 

LC = Local currency

TC = Transaction currency

FC = Foreign currency (participating currency)
  1. Before the local currency changeover (1.1.1999) from DEM to EUR, all money market transactions are managed as local currency transactions.
  2. In the period between the local currency changeover and the transaction currency changeover (01/01/1999 to 01/01/2001), all money market transactions are managed as foreign currency transactions.
  3. After the transaction currency changeover (01/01/2001), all money market transactions are managed as local currency transactions again.
  4. After the local currency changeover (for example, 01/01/1999), the money market transaction must be valued at the fixed euro rate using the valuation function incorporated in the changeover program.

The system does not create any additional valuation flows during the transaction currency changeover.

The euro valuation flows are taken into account when the realized gains and losses are calculated.

2: Transaction currency changeover after the local currency changeover

LC ¹ TC

LC = DEM / TC = FRF

LC changeover as at 01/01/1999

TC changeover as at 01/01/2001

 

 

LC = Local currency

TC = Transaction currency

FC = Foreign currency (participating currency)
  1. Before the local currency changeover (01/01/1999) from DEM to EUR, all money market transactions are managed as foreign currency transactions.
  2. In the period between the local currency changeover and the transaction currency changeover (01/01/1999 to 01/01/2001), all money market transactions are still managed as foreign currency transactions.
  3. After the transaction currency changeover (01/01/2001), all money market transactions are managed as local currency transactions.
  4. Refer to example 1, step 4.

Posting System for Example 2

 

T-account example: Money Market

Transaction : 1000 FRF

LC : DEM (already valued at fixed rate)

TC changeover : FRF ® EUR

 

Postings:

3: Transaction currency changeover before the local currency changeover

LC = TC = DEM

LC changeover as at 01/01/2001

 

 

LC = Local currency

TC = Transaction currency

FC = Foreign currency (participating currency)
  1. Before the transaction currency changeover (01/01/1999) from DEM to EUR, all money market transactions are managed as local currency transactions.
  2. In the period between the transaction currency changeover and the local currency changeover (01/01/1999 to 01/01/2001), all money market transactions are managed as foreign currency transactions.
  3. After the local currency changeover (01/01/2001), the money market transactions are managed as local currency transactions again.
  4. During the transaction currency changeover, the system values the money market position at the fixed euro rate.

Gains and losses resulting from the transaction currency changeover are disclosed separately, regardless of the valuation principle for the corresponding transaction type. Any valuations after this point in time do not generate additional gains and losses.

The gain/loss that has already been disclosed is taken into account when the realized gains/losses are calculated.

4: Transaction currency changeover before the local currency changeover

(LC ¹ TC)

LC = DEM / TC = FRF

LC changeover as at 01/01/2001

TC changeover as at 01/01/2000

 

 

LC = Local currency

TC = Transaction currency

FC = Foreign currency (participating currency)
  1. Before the transaction currency changeover (01/01/2000) from DEM to EUR, all money market transactions are managed as foreign currency transactions.
  2. In the period between the transaction currency changeover and the local currency changeover (01/01/2000 to 01/01/2001), all money market transactions are still managed as foreign currency transactions.
  3. After the local currency changeover (01/01/2001), all money market transactions are managed as local currency transactions.
  4. Refer to example 3, step 4.

Posting System for Example 4

T-account example: Money Market

Transaction : 1000 FRF

LC : DEM

TC changeover : FRF ® EUR

 

 

Postings:

Assumptions: 1 FRF = 0.0145 EUR

1 EUR = 2 DEM

 For more information, see Money Market

The following sections Money Market, Foreign Exchange and Derivatives describe the preparation, conversion and cleanup activities you need to carry out for the transaction currency changeover.