Originally created 12/31/98

The Euro: A Q&A



Some common questions and answers about the euro:

Q. How much will a euro be worth?

A. The exact value of the euro will be set Jan. 1. It is expected to be slightly stronger than the dollar, around $1.10 to $1.20 to a euro. The dollar, in other words, will be worth between 83 and 91 cents.

Q. What will happen when the euro is launched?

A. The euro becomes the official currency in the 11 nations. That means stock exchanges will trade in euros and large businesses will keep track of finances in the euro. However, euro notes and coins won't enter circulation until 2002. To ease the transition, bank customers can keep accounts in euros -- alongside national currencies -- starting Jan. 1.

Q. Will Americans and other travelers from outside the 11-nation euro bloc need euros notes, coins or travelers' checks after Jan. 1?

A. No. Euro notes and coins won't be available until 2002. For now, the local currency is still good. Travelers checks will be available in euros, but aren't a must.

Q. Will there be any effect on the dollar?

A. That's not yet known. No sudden challenge is expected although the euro eventually could challenge the dollar as the international currency of choice.

Q. Who in the United States will be affected?

A. Managers at firms that buy or sell in Europe or have subsidiaries there.

Q. What are the advantages for business of the euro?

A. The size of the new currency bloc -- with 290 million inhabitants -- will provide a stable economic and business environment. Businesses will save money; the costs of changing currencies from country to country will be sharply reduced. Comparing prices will be quicker and interest rates will stabilize. All this will make long-term planning easier.

Q. What are the advantages for ordinary consumers?

A. Residents of the euro countries also will benefit from it being easier to compare prices across borders, and they won't have to change money within the bloc. Tourists, too, can avoid costly commissions as they move across Europe.

Q. Why did the countries choose to give up their national currencies?

A. The original idea was developed shortly after the end of World War II. The goal was to link Europe so closely that another war would be impossible. Political union proved too difficult, with countries refusing to give up national sovereignty. Economic union, as symbolized by the common currency, remains a feasible goal.



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