Features

Is it only money?

International | As Europe moves toward a common currency, Brits, Danes, and others worry about handing power to eurocrats

Issue: "Mel Martinez: HUD's man," March 3, 2001

Where would Dickens be without his pounds sterling? Or Conrad without Belgium francs to grease his way into the Congo's heart of darkness? In the 21st century, the icons of European adventures will need a further stretch of imagination to thicken the plot with m oney. Under the eraser of globalism, age-old currencies will go the way of Spanish doubloons when the European Union begins circulation of its one-size-fits-all currency, the euro. For 11 European countries, that change will begin in less than a year. Never mind that the new money sounds like the latest yo-yo; in continental politics, euro-dynamics are serious-and controversial-business.

The euro became official currency last year for the member states that joined an economic partnership known as the European Monetary Union. The 11 members are Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, and Finland. In January Greece joined the group, collectively referred to as the eurozone.

But in monetary terms, the euro is not yet "scriptural"; that is, banknotes and coins are not available, even though the currency is actively traded in financial markets. For most people, guilders and lira and francs and marks continue to pay the way.

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Official circulation of euro banknotes and coins begins Jan. 1, 2002. By the end of February 2002, all members of the eurozone must remove their present national currencies from circulation. That leaves 2001 as a year of transition, according to European Union officials. From Brussels (where the European Union is headquartered) to Frankfurt (home of its central bank), officials are mounting a public relations campaign, touting the security and benefits of a continent-wide currency and reassuring the public about the ease of moving to new money. They are posting mock-ups of the currency on the Internet and in public buildings.

Euro coins will debut in eight denominations-one, two, five, 10, 20, and 50 cents, as well as one- and two-euro coins. Each face has a common dashes-and-stars design, but the obverse side bears an individual national design. One version issued in Spain, for instance, has a bust of King Ferdinand. Regardless of national motif, the coins can be used anywhere in the eurozone.

Euro notes will come in different sizes and colors, and in seven denominations, from five to 500 euros. Unlike coins, they have no national markings. Their faces look symbolic rather than historic-stylized bridges on one side; gates and windows on the other. The architectural forms are meant to symbolize New Europe, bridging communication gaps and opening new vistas.

In reality, national barriers are harder to topple. Currency has long been a sign of sovereignty, and some European partners worry about the reach of a European Central Bank. Will national governments be able to decide their own level of direct taxes and public spending? Will they retain authority to lower unemployment and inflation? Will monetary union deaden a government's ability to respond to foreign policy or defense challenges?

In February eurocrats interfered in just the way critics fear, throwing a yellow card at one European Monetary Union member, Ireland, for cutting taxes and boosting spending. European Union finance ministers publicly censured Ireland at a meeting in Brussels, and said it must trim its budget sails in order to fit eurozone guidelines.

It was the wrong fight to pick, considering that Ireland has the fastest growing economy in Europe. Output is expanding at 12 percent annually, and gross domestic product has increased 9 percent since finance minister Charlie McCreevy launched a $1 billion tax cut. The growth has led to a budget surplus, to reductions in public spending on welfare, and to rising employment. While eurocrats worry that Ireland's economy will overheat, wary euro investors wonder if the eurozone permits prosperity.

Answering to faceless Brussels bureaucrats is giving other European countries second thoughts. In a referendum last year, Denmark voters said no to full participation in the European Monetary Union, 53-47 percent. The vote took europhiles completely by surprise. Danes, usually known as progressive, in this case said they would like to keep their krone. Of those voting no, most (37 percent) said they favored less integration with Europe, one-third said they want to preserve Danish identity, and a smaller percentage (23 percent) said they lacked confidence in the European Union as a governing body.

Those findings are even more surprising, considering that most Danish voters have long known they were headed for the eurozone. For more than a year, the krone has been tied to the euro exchange rate. The negative reaction to the euro dominated in spite of widely publicized benefits. Proponents say adopting the euro will lead to lower interest rates, boost business by reducing the cost of currency swaps among European trading partners, and end the uncertainty about floating exchange rates.

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