May 1, 1998
The euro moves a step closer to reality this weekend after the European Union announces the eleven nations which qualify for the common currency. Following a background report, Phil Ponce and guests discuss the economic and political significance of the euro.
PHIL PONCE: This weekend in Brussels, European leaders will take a major step toward one common currency.
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The European Union.
Final plans for the euro.
Eleven of the European Union's 15 members are expected to approve final plans for the introduction of the euro next January. That's when the Euro will make its debut simply as an accounting unit for governments and businesses in noncash transactions. Then in January, 2002, the colorful faceless notes will begin to circulate throughout the continent. By the middle of that year, all national currencies will be canceled--along with all the encumbrances of multiple currencies. For years European leaders have debated whether to go forward with a single currency.
PRIME MINISTER MAJOR: It will be the most important single monetary decision taken across Europe within living memory, so it has to be right.
PHIL PONCE: Britain, in fact has opted to stay out for now, as have Denmark and Sweden. Greece failed the criteria for joining. But the other eleven EU countries decided the Euro will attract new investment capital and force Europe to become more competitive.
WERNER HOYER: The Europeans do not really realize what the pressure of the competition in the year 2000 and beyond will be, how important it is to get the European act together if we want to bear the brunt of that competition coming from Asia or North America.
PHIL PONCE: And trying to get their act together is what European governments have been doing in anticipation of the euro. Even with the price of higher unemployment and public discontent, individual countries have been following a strict regimen of tighter budgets and spending cuts to qualify for membership in what will be called Euroland. According to currency union rules, each country's cumulative debt cannot exceed 60 percent of yearly economic output, nor can its annual budget deficit succeed 3 percent.
WERNER HOYER: It has led to a pressure which produced economic and social reforms which would have been unthinkable without this sort of pressure.
PHIL PONCE: At this weekend's meeting, exchange rates between the eleven national currencies and the euro will be fixed forever. But there are still questions on just how well these sovereign nations will work together in the new order. Even on the eve of tomorrow's launch a dispute remains between France and Germany over who will head the new European Central Bank.