Originally created 12/31/98

Euro marks beginning of a new era in Europe

BRUSSELS, Belgium -- Europe's single currency debuts at midnight Thursday, the biggest step so far toward uniting Europe into an economic bloc that could rival the United States.

A huge clock in Brussels ticked down the hours to E-Day, but even one day ahead of the birth of the "euro," new economic figures and controversial comments from the head of the European Central Bank showed the road ahead may not necessarily be all that smooth.

For now, the "euro" coin is available only in chocolate -- real euro coins and notes are to replace francs, marks and other traditional currencies only in 2002. So Europeans and tourists will be dealing in old money for three more years when using cash, but euro transactions will be possible through checking accounts and credit cards.

Already, merchandise from industrial products to bouquets sold on the French Riviera is carrying euro as well as local-currency prices, making cross-border price comparisons among the 11 euro countries a snap. Britain is the biggest European Union nation not planning to use the euro.

Finance ministers and central bankers from most of the 11 participating EU nations meet in Brussels on Thursday to freeze the relative value of their national currencies -- a move to keep them from fluctuating with each country's financial fortunes.

Banks, bond and stock markets and international businesses are spending the weekend adapting trading floors and computer screens to include the joint currency. In its first working day Monday, the euro is expected to trade at about $1.18, 6.58 French francs or 1.96 German marks.

The euro will streamline trade, and could further advance prosperity, in a bloc of 290 million people with an economic clout already rivaling that of the United States. A strong, unified euro could even level the playing field when it comes to global trade by challenging the dollar's position as the leading world currency.

The euro, however, also could help U.S. multinationals better plan their strategies in Europe and cover much more of the continent without having to worry about national monetary fluctuations.

As Europeans from Spain's Mediterranean beaches to Finland's frozen tundra prepared for the euro, it was clear some bumpiness was persisting in the historic move toward a single currency:

--November inflation figures released Wednesday indicate a 0.9 percent annual inflation rate in the 11 euro nations -- the continuation of a steady decline. Portugal and Ireland, however, have reported significant inflation-rate increases over the past year. Some economists consider that problematic because a low common interest rate that would boost core EU economies such as France and Germany could overheat smaller nations with faster growth.

--And the man guiding euro policies, Wim Duisenberg, said in an interview published Wednesday in France's Le Monde that he intends to fill out his full 8-year term as head of the new European Central Bank. Earlier, Duisenberg had said he would step down in four years -- a "gentlemen's agreement" to settle a row following France's last-minute call for another chief banker.

Whatever lies ahead, when the New Year begins, the euro will be a fact of life from the trading floors in Tokyo to the smallest bank in the Grand Duchy of Luxembourg.

But after years of belt-tightening to meet entry requirements for the single currency, wild celebrations aren't likely to welcome the euro. Politicians will pop open champagne at the official launch, though Germany's Finance Minister Oskar Lafontaine is not even interrupting his holidays to participate in the Brussels festivities.

Of the 15 EU nations, only Greece failed to make the strict monetary conditions for joining. Britain, Sweden and Denmark opted out for now -- holding on to their rights to set independent monetary policy for domestic reasons, such as to boost the economy or improve social conditions.

In Ireland, which will be part of the euro zone, a group calling itself "Citizens for Keeping the Irish Punt" demands officials "break the link with the euro and re-establish a national currency." In Vienna, Austria, however, posters are welcoming, saying "Euro -- Prosit."

Pascal Dekeyser, a train conductor on the line between Brussels international airport and the historic city center, only wishes the euro coins and bills would come sooner.

"I'm all for it. You cannot believe the number of currencies I have to deal with when tourists have to pay. It was just too much. With the euros, it will all be much easier."

But as with all coins, the euro will have a flip side. "For my mother, who is in her 70s, it will be a nightmare," Dekeyser said. "She is already in a panic and has asked me for a calculator."


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