LONDON--January
1, 2002: A new era
in European unity began.
Three hundred million
citizens of 12 European
countries peacefully
adopted a new currency,
an event that even
the most pro-European
of Europeans could
only have dreamt of
as they began to rebuild
their economies after
World War II.
Even
though the objectives and the timetable for
the adoption of the euro had been agreed for
more than a decade, the debate for and against
the euro within European countries never lost
its fervor. So much so, in fact, that most
European politicians never put the question
of the adoption of the euro to their voters
for fear of losing. It was surprising to most
of us, therefore, that much of the polemical,
often nationalistic, debate over sovereignty
still evident across Europe suddenly gave way
at the strike of midnight on New Year's Eve
to excitement as the euro became real, tangible,
in-your-pocket, buy-an-espresso money for Europeans
in 12 countries.
It is really quite an
extraordinary achievement,
if you think about the
political action and
forget, for a moment,
the economic implications
of adopting a single
currency across 12 trading
nations. Think for a
moment of the strength
of political will required
to abandon your own national
currency, with the pictures
and imprints of your
own famous people adorning
your coins and banknotes.
Rarely in history have
people of any country
decided, democratically
and peacefully, to give
up their beloved currency
in exchange for a brand-new,
artificially created
currency.
Historically,
if a currency is changed,
it is for
more immediate, economic
reasons: If a currency
is losing value rapidly,
nations may create new "editions," as
the French did when they
replaced the "ancien
franc" with the
new franc and as the
Germans did after World
War I when they created
a new, strong Deutschemark;
other countries have
been known to simplify
their own national currencies,
as the British did most
recently in 1971 when
they moved to the decimal
system of pounds and
pence.
Even more examples exist
of countries that have
pegged their own currency
to another, stronger
one, but they kept their
own currency and denominations.
And finally, newly independent
colonies certainly adopt
new currencies as rapidly
as they can get the mint
up and running. The not-yet-independent
American colonies created
their own dollars long
before they won independence
from Great Britain, but
still had different versions
of the dollar for years,
even decades. To abandon
your own currency in
exchange for a new one
that unites you to 11
other countries, their
strengths and their weaknesses,
is truly remarkable.
Granted, the countries
did have a three-year
trial period to get used
to their loss of independent
monetary policy. Since
January 1, 1999, the
original 11 countries
(Greece joined later)
had surrendered their
monetary policy-making
powers to the newly created
European Central Bank;
at the same time, the
values of their currencies
were locked into that
of the euro. These three
years have been critical
for the heavy logistical
preparations required
(replacing everything
from shop tills to bank
accounting systems, and
the actual production
and distribution of some
15 billion banknotes
and 51 billion coins
to banks and retailers),
and to allow the new
Central Bank and its
governing bodies to figure
out how to work with
12 masters. In fact,
most of the attention
over the past three years
as been on the Central
Bank, its policies and
its personalities--not
on the new money.
But although euros could
increasingly be used
electronically, they
did not really exist
in the minds (or pockets)
of the population. The
different attitudes toward
the euro among the populace
becomes evident as one
travels across Europe:
In Spain, most prices
gradually moved to both
euros and pesetas. Likewise
in Paris and Frankfurt,
where francs and marks
sat happily alongside
euros on printed menus
and handwritten signs
on fresh produce stalls.
But in Italy as recently
as December, even in
the grand metropoli,
rarely did one see prices
in euros--and the Italians
were supposed to be the
most pro-euro of the
lot!
Perhaps the approach
to transition was most
indicative of the national
character and true acceptance
among Europeans of their
new money. Each country
was allowed to decide
its own timetable for
transition, and in a
perfect reflection of
the heterogeneity of
the European Union, transition
timetables range from
0 days in Germany, where
as of January 1, 2002
only the euro was valid,
to two months (until
February 28) in Italy,
when the lira finally
disappears.
Experience may prove
the German approach the
better one: in a telephone
poll conducted by Germany's
ARD television channel,
more than three quarters
of 10,000 callers on
January 2 said they had
experienced a trouble-free
first business day with
the new currency.
That is better than
the Italian experience,
where confusion appears
to reign, as both currencies
hold equal ground and
no one really knows the
value of the euros they've
just been given in change
for the cappuccino they
had paid for in lire.
Forgetting the momentous
political and economic
implications of the euro,
the great thing about
it for most of us, of
course, is the freedom
it gives us from the
hassle of having to buy
and then sell back all
the different currencies
we need as we travel
around Europe.
Most of us active European
travelers have a drawer
full of francs, pesetas,
lire and marks. From
now on, a Finnish euro
is worth a Spanish euro,
and that is pretty exciting,
even sitting here in
non euro Britain. Once
the transition is over,
and things settle down,
then maybe Europeans
will spend more cross-border
in Europe, and sell more
to other Euro countries,
because it's so easy--which
is exactly what all those
politicians and eurocrats
want.
