|Key Words||Currency Union, Exchange Rates, Economic Growth|
The euro, Europe's new currency, debuted January 4 on the world's financial markets. The much-awaited debut was flawless, and enthusiasm for the euro raised its value relative to other major currencies including the dollar. After its first day of trading, the euro, which opened at $1.17, climbed to $1.1806 by day's end. Euro-phoria extended to the stock markets of Germany, France, Italy and Spain with increases of 5 percent or more.
There was little evidence of change in daily life of European countries. Euros are only usable for electronic payments until 1 January 2002. Only then will banks be able to supply euro currency. However, customers are able to open a euro-denominated bank account and to make purchases and write checks in euros. Fewer than 1 percent of the customers of the largest German banks had opened euro-accounts, probably because for the average European, there is little need to have one. Few stores in Germany were even posting prices in euros.
The possibility of confusion and some glitches remains, because until 2002 transactions will take place in both the domestic currency and the euro. Banks and financial institutions will have to be able to make the conversion. Banks have said that they will refuse to process bank transfers if the customer forgets to specify which currency is being used on his or her check. This will surely anger many people.
The market for euros opened in Asia and Australia first and its price rose as Asian fund managers bought the euro as a hedge against the global economic crisis. Demand continued to rise with the opening of European financial markets.
(Updated February 1, 1999)
|Source||Edmund L. Andrews, "Without a Hitch, the Euro Opens To Trading in World Marketplance", The New York Times, January 5, 1999.|
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