BRUSSELS (Combined Sources)–The euro single currency got off to a flying start on Monday as politicians and investors gave a vote of confidence to the culmination of a 50-year drive to bind Europe’s economies as one.
The euro became the official currency of eleven countries: Finland–Germany–France–Belgium–the Netherlands–Luxembourg–Spain–Italy–Austria–Portugal and Ireland. Great Britain–Denmark and Sweden might have been members of the Economic and Currency Union (ECU) if they had wished to–but decided to wait. Greece had been longing for joining the ECU–but was not admitted because of poor macroeconomic results. Nevertheless–these four countries may join the ECU in the future
Erasing currency barriers is expected to offer a chance to economize enterprises and companies which used to lose millions of dollars during international currency deals. Competition is expected to grow on a continental scale–which is expected to promote economic growth and in the long run–will result in price reductions.
The symbol of euro–"epsilon" with two horizontal dashes in the middle is a symbol of succession of ideas of the European unity. Back in the seventh century this symbol was depicted on Byzantine coins "pentanummi" which were in circulation from the Pyrenees and as far as Armenia.
Stock and bond markets across Europe toasted the arrival of economic and monetary union–soaring on expectations the euro will boost growth and prosperity in the 11 nations that have initially adopted it.
European Commission President Jacques Santer said he was confident the euro–representing an economic bloc almost as large as the United States–would act as a counter-weight on world currency markets between the dollar and the yen.
"That was one of our main goals,” Santer said. “The single currency will be a credible currency accepted by international markets." "I know the importance of this currency. I know that it will make Europe move forward,” German Chancellor Gerhard Schroeder said. The euro’s advent means exchange rates of national currencies such as the French franc and German mark are irrevocably fixed against each other. Consumers can already pay in euros using credit cards and checks–but currencies will continue to circulate until euro notes and coins are introduced in 2002.
Throughout Europe the story was the same – a mix of indifference–downright suspicion and occasional praise.
"I don’t have much money now and I won’t have much money in the future with the euro,” said an elderly man in a Madrid bank.
"It’s fantastic–it just makes life so much simpler,” countered Naples pensioner Adriano La Grassa. “Now you know what you can buy in Italy for 10 euros–you can buy in Germany for 10 euros – I’d go as far as saying they should bring in one currency for the whole world." After months of painstaking preparations in dealing rooms around the globe–the actual start of euro trading on wholesale financial markets was something of an anti-climax.
The 11 countries that adopted the euro on January 1–have about the same economic output and share of world trade as the United States. Euroland has a population of just over 290 million–compared to nearly 270 million in the United States. This weight is likely to give the euro a firm underpinning–especially as international investors and central banks switch some of their holdings out of the dollar–economists say.
Investors–now looking at a huge–increasingly integrated single market for bonds and equities cemented by the euro–gave a clear thumbs-up to Europe’s first truly common currency since the Roman empire. Shares in Germany–France–Italy and Spain all rose at least five percent.
The United States reserved judgment on Europe’s new currency on Monday as it shrugged off fears the euro could pose a challenge to the US dollar’s status as the world’s top reserve currency. Instead–top US officials reiterated their long-standing mantra that what is good for Europe will be good for the United States–adding only that the euro’s long-awaited launch underscored the need for sound economic policies at home. "As we’ve said many times–if it’s good for Europe then that’s good for the United States.
"A strong Europe is good for the United States,” US Treasury Secretary Robert Rubin told reporters after a speech at the National Press Club.
Washington’s low-key approach to the euro reflects US concerns that Europe might turn its back on problems elsewhere in the world economy as it concentrates on making its historic currency union work.
At the same time–US officials have said the focus on the euro must not deflect from structural reforms to reduce sky-high unemployment rates in much of Europe.
The 11 nations that adopted the euro have about the same economic output and share of world trade as the United States.
That weight has prompted some analysts to speculate whether investors and central banks may switch their holdings from the dollar into the euro. That would make it harder for the United States to attract capital that it needs to finance its ballooning trade deficit–push up US interest rates and put a damper on growth. "The euro will start to challenge the dollar as the world’s lead currency as soon as the European Central Bank and the new currency establish their credibility – which will probably be quite soon," Fred Bergsten of the International Institute for Economics wrote in the International Herald Tribune newspaper.