Europe Enters the Euro Era

The global economy is in for a change unlike any experienced in the modern times. The nations of the European Union are poised to yield sovereignty over their individual currencies and monetary decisions and create a single European currency. The goal is a market-driven competitive economy that will rank second only to the United States.

This will be an enormously complicated endeavor but if it goes as planned--and that’s a big “if”--the French franc, German mark, Italian lira and other familiar European currencies will be history. The common currency of Western Europe will become the Euro. You can fold it, bank it and bet it, but somehow things won’t be the same.

American consumers are not likely to be directly affected, but businesses and policymakers could face formidable competitive challenges.

This weekend, 11 of the 15 members of the EU--Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain and Portugal--are expected to approve final plans in Brussels to begin the process. Britain, Denmark and Sweden are not yet committed to participation, and Greece did not qualify under the EU program. Next Jan. 1, a new European central bank will take over EU monetary policy and phase in Euro-denominated stocks, bank accounts, credit cards and prices. Full circulation of the new currency is expected by 2002.

There will be plenty of risks in this endeavor for European unity--not only economic but political, social and cultural. Jobs and businesses will be lost in a more competitive market. Popular attitudes are mixed. Many Europeans are angry that politicians and businessmen--not a vote of the people--will make decisions that could impact heavily on their lives and livelihoods. And the American-style capitalism that the Euro offers will stand at odds with the generous job benefits that European workers have come to expect. One thing is clear: Markets spawn change much faster than governments. That’s about the only certainty in the rush to the Euro.