Major Nelson has updated his blog to confirm the latest Xbox Live update will switch everyone to local currency. This switch will be effective as soon as you finish the update on your Xbox 360.
For the moment, Microsoft Point Cards will still be accepted. How this will work out is when you enter in the card data to your Xbox 360, the system will automatically convert those points to your equivalent local currency. As they say, you will still be able to redeem point cards and codes until further notice.
The official Microsoft Points retirement FAQ also reveals that they will be rolling out new Xbox Gift Cards that will come in local denominations. The switch will actually provide users with a little extra money. Microsoft explains that they have decided that where applicable, you will get the higher amount of Marketplace Value when your points are converted. This is likely to vary per currency, and will not necessarily correspond to retail prices, so caveat emptor.
In regards to expiry on the points, Microsoft will make sure to use the earliest expiring amount of points so you will not have to worry about it. There is an exact one year expiry date for all Microsoft Point cards and codes that you add in to your account after it switches over.
Eventually, Microsoft promises that you will be able to manage your Marketplace Value even without an Xbox, and since they intend to use the same system to manage Microsoft purchases from their other markets, such as your Windows games, this is definitely one for the consumer. If you still need more details, hit up the link below.
Source: Major Nelson