Twelve countries begin banking on the euro
The new money went into circulation on Jan. 1, hailed as a 'a great day' for Europe.
Three hundred million Europeans are turning over more than just new leaves as they usher in 2002; they are turning over shiny new coins in their hands, puzzling out their brand-new currency, the euro, which came into circulation with the new year.Skip to next paragraph
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For the first time since the Roman denarius was accepted all over Europe, 2000 years ago, the continent has a common currency, legal tender from the Arctic to the Mediterranean, in 12 European countries.
Statesmen are hailing it as a visionary step toward a more united Europe, seeing the new notes and coins as the most visible and tangible symbol of European integration.
Calling the euro's first day "a great day for Europe," European Union chief Roman Prodi said the new currency would bring "an increase in European identity."
In towns and cities across the continent, shoppers had more immediate concerns.
At Pascale Lanterne's bakery in central Paris, for example, a line of customers waited patiently while Ms. Lanterne and a customer carried out protracted sums - each with a hand calculator - to convert francs into euros.
"I prefer to check, at least to begin with," said Lanterne. "And most people are being patient."
Overall, the changeover from 12 national currencies to 570 billion dollars' worth of euros - the largest financial operation in history - seemed to go remarkably smoothly, with lines at some highway tollbooths proving the worst inconvenience, as motorists fumbled with the new coins.
Few ATMs were ready to dispense euros as midnight struck on Monday night, but by Wednesday, when shops and businesses reopened after the New Year holiday, almost all of them had been filled with the new bills.
Not that many people were using them.
Most shoppers in Paris were getting rid of their old francs before using euros: The old currencies will be legal tender for another six weeks, during a transition phase.
"I've made the big decision, I'm switching to euros, but I've still got some francs to use up first," said one customer at Lanterne's bakery.
Like shopkeepers everywhere in the euro-zone, Lanterne is giving change in euros no matter what she is paid in, which makes for some delays in transactions, but which will speed the overall transition.
"We are acting like bankers in a way," explained Didier Pean, who runs a newspaper kiosk in Paris.
"We are hoovering up francs and handing out euros." And he was hoovering up francs fast on the first day of the euro's existence. As he closed up shop and tallied up his takings, he found that more than 90 percent of his turnover had been in francs.
By the end of February, none of the 12 traditional currencies will be legal tender. (Of the 15 European Union members, Britain, Sweden, and Denmark have chosen to stay out of the new currency zone.) Money as old as the Greek drachma, which goes back 2,600 years, will be crushed and melted down, in the case of coins, or punched with a hole and then pulped in the case of notes.
Still, central banks and governments will make a profit on the deal, despite the costs of disposing of old money and minting or printing new. They estimate that they will make a windfall profit of up to 15 billion euros ($13.3 billion) from legacy currencies that are not handed in for exchange: bills, which represent claims against the banks' assets, may have been lost in the wash, held back by criminals who do not dare to exchange them for fear of being caught, or simply kept for sentimental reasons.
The single European currency was designed both as a political gesture - bringing together the countries of a continent chronically plagued by war over the centuries - and as an economic move to boost competitiveness and performance.
As a virtual currency that has existed only in financial transactions for the past three years, the euro has not done well, losing about 25 percent of its value against the US dollar.
Critics, especially in skeptical Britain, argue that the euro is illsuited to a collection of very different countries with different economic needs. Especially worrying, they say, is the prospect that one country will require soft credit facilities to aid economic recovery while another might need a tighter regime to hold down inflation: the European Central Bank, which controls the euro, can set only one interest rate for the whole area.
At the same time, history has shown that political unity is essential to the strength of any currency union, and doubts persist about European nations' ability to show such unity in the face of a crisis.
Some institutions have smaller, but nonetheless worrisome concerns about the new money.
The Roman Catholic Church in France, for example, has become accustomed to members of its congregations putting convenient 10 franc ($1.33) coins into the collection box. Priests fear that the faithful will now give one-euro coins, worth only 89 US cents, instead, and have launched a campaign to encourage them to toss in two euro coins.
Despite such anxieties, however, the rollout of the new money has gone well enough to calm most doubters, at least for now.
On foreign exchange markets, the euro's credibility rose with its arrival in physical form, gaining 1 percent against the dollar yesterday.