January 2, 2002
The fact that 302 million Europeans have agreed to give up their familiar francs, marks, schillings, lire, drachmas and pesetas in favor of an unfamiliar, single European currency must give some faint hope for the possibility of the unity of humankind, if not in all things, then at least in some, and at least in one part of the world. Indeed, this fundamental shift, which is the biggest currency change in history, is evidence of how far the European continent has moved towards the dream, at the end of World War II, of a "United States of Europe". The European Union already has a common legal code, trade rules, bill of rights, car license plate and central bank. For a long time people traveling within Europe have not been required to have separate visas. From now on they will no longer have to change currencies either. While there may still be many differences between the Spanish and the Belgians, Germans, Portuguese and Finns, henceforth they will all pay for their daily bread, milk and petrol with the same money: the euro.
Since January 1999, the euro has existed as virtual money, in use in electronic transactions. Today people in 12 European countries are getting used to the look and feel of euro notes and coins. Of the 15 countries making up the EU only Britain, Denmark and Sweden have so far declined to adopt the euro. How long these countries, particularly Britain, can remain isolated from the monetary union remains to be seen, given that numerous British businesses are already converting stationery and cash registers to accept the euro. Prime Minister Tony Blair is under pressure to call a referendum to gauge public support for adopting the European currency, and he would do well to do so. Opinion polls so far have shown most Britons are opposed to it. Yet half of all British trade is conducted with the 12 euro member states, and Britons make 40 million trips a year to those countries. The likelihood is that familiarity with the euro will dissipate much of the mistrust of it.
For Australians, the main benefit will be in not having to go through the cost and inconvenience of changing currencies each time we change countries when travelling in Europe. Banks here warn that the period in which the old currencies are accepted will be short, and after February 28 the currencies will become invalid. Of course such a major change will not be without problems. Abolishing individual currencies means giving up the tool of monetary policy to the European Central Bank. And as the governor of the Bank of England, Sir Eddie George, has cautioned, the same monetary policy is not optimal for every country at the same time. So far, rather than challenging the US dollar as a global reserve currency, the euro has lost more than 20 per cent of its value. Nevertheless the euro is a brave experiment, and one that can only be applauded.
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