The euro cash changeover that took place in 2002 in 12 countries of the European Economic and Monetary Union was associated
with abnormal price increases in most member countries. This paper investigates the influence of product market competition
on the size of the changeover-related prices hikes, showing that the price hikes were less prevalent in countries with a higher
level of competition. For the countries that are to join the euro area in coming years, this means that fostering competition
can help contain changeover-related price increases. This aspect is of particular importance for the most recent and next
wave of euro adopters, because of their rather heavy product market regulations as measured by the OECD, which are likely
to restrain competition. The results indicate that comprehensive reform efforts can be more beneficial in containing changeover-related
price hikes than a selective easing of product market regulation in a subset of areas.