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Euro awaits single financial market

Three years after European monetary union, euro notes and coins enter circulation next month. Some observers predict a mild boost for the currency. But will fresh impetus also be lent to Brussels’ initiative to build a single European market in financial services to complete the picture? This project has been caught up in a constitutional trial of strength as the Strasbourg-based parliament asserts itself. Alexandre Lamfalussy, an architect of the project, hopes the euro’s arrival will focus attention on resolving the dispute about who should agree the principles and who the detail.

The introduction of euro notes and coins on January 1 marks the point of no return for the bold European single currency project. There's no way to untangle the monetary knot once the old currencies have been destroyed. That alone means the event will be of huge symbolic importance. China has recently bought euros for its vast reserves. And the prevailing view is that the euro's external value may about to undergo a modest rise, reversing the gentle downward drift prompted by a concern that something serious is bound to go wrong when Deutschmarks, francs and other national currencies are finally scrapped. At last, the materialization of the currency will wash away worries about its durability and boost flagging popular support for it, say the optimists, who count among their number some of the eurozone's central bankers.

Wilting confidence among both business and consumers has been one of the most important failures of the exercise to date. Survey after survey has found respondents unimpressed - from Ireland to Austria - matching the underwhelmed reaction of foreign-exchange markets since the launch three years ago.

Still, the euro's decline against the dollar has hardly been anything out of the historical ordinary.

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