Euro, one currency for Europe

The euro will be internationally legal currency from Jan. 1, 1999, enabling it to be used in financial markets and for a range of company activities. Legally speaking, the national currencies of the participating countries will become subdivisions of the new currency. However, for most people, the euro will really become part of their everyday lives from Jan. 1, 2002, at the latest, when euro notes and coins will become available. Euro notes will be issued in denominations of 5, 10, 20, 50 100, 200 and 500. There will be eight different coins ranging from 1 cent (one-hundredth of a euro) to 2 euro.

The process of a single monetary policy within a single economic market, or economic and monetary union (EMU) has already started. The first stage of EMU began on July 1, 1990. Stage two also began on schedule, on Jan. 1, 1994. The big changes come with the third and final stage. Under the Treaty on European Union, the third stage of EMU is to begin on Jan. 1, 1999.

The decision as to which countries qualify for stage three were made by member states at their special EMU Council in Brussels on May 2 and May 3, 1998. Eleven EU member states -- Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland -- were declared to fulfill the necessary conditions for the adoption of the single currency on Jan. 1, 1999.

The criteria member states must meet to qualify for EMU are contained in the Maastricht Treaty on European Union and concern price stability, public finances, exchange rates and interest rates. Denmark and the United Kingdom, on the other hand, have exercised their right under the Treaty not to participate in EMU on Jan. 1, 1999. As Sweden is not a member of the actual European Monetary System, it will also not adopt the single currency at this stage. The Council also recommended the appointment of Wim Duisenberg as President of the European Central Bank.

By ratifying the Maastricht Treaty, the member states opted for stability after learning from experience that high levels of inflation, the accumulation of public deficits and high long-term interest rates distort business decisions and expectations, shift the burden of a short-lived recovery onto future generations and deter investment, slow down growth and hold back job creations.

The introduction of the euro confirms the advent of a genuine culture of stability in Europe that is essential to the establishment of a stable, sound and efficiently managed economic framework. It is also a response to globalization and current developments in the world economy.

EMU will revitalize the European economy and the single market, foster investment, boost business competitiveness, benefit consumers and savers and make life easier for citizens where work and travel are concerned.

The euro is suited to taking on the mantle of one of the leading international currencies. First, it will rapidly become a currency in which world trade is conducted and invoiced, reflecting Europe's huge importance in this sphere. Second, the euro's credibility, allied to a large and very liquid financial market, will attract foreign investment. Last, the euro's development will increasingly confer on it the status of an international reserve currency.

More fundamentally, the euro, through its recognized stability and widespread use, will help establish a better balance in international monetary relations, offering Europe the opportunity, together with its principal partners, to find ways of making the international monetary system more stable.