Nearly 50 years after European leaders dreamed of uniting their nations to prevent another world war, 11 countries led by Germany and France are soon to surrender a central pillar of national sovereignty: control over their currencies.
Despite some remaining feuding and recrimination, leaders from all but 4 of the 15 nations in the European Union are expected to approve final plans next weekend for the introduction of a single European currency Jan. 1.
Financial institutions and a few big companies will shift in 1999 to euro-based electronic transactions, although the actual bills and coins will not be used until 2002.
But in a real sense, the new order begins in Brussels this week, because European leaders are expected to spell out the exchange rates at which their individual currencies will be locked together. As a practical matter, their countries will immediately subordinate individual monetary policies in favor of a common European policy.
Most economists say the euro's long-term prospects are better than they dared imagine a few years ago. Inflation is low. Growth is accelerating across the Continent. And a world barometer for financial credibility, the currency markets, increasingly behaves as if the euro already were a fact of life.
"The euro will be to the dollar what Airbus is to Boeing," said Norbert Walter, chief economist at Deutsche Bank Research. "We have better airplanes as a result of competition between Airbus and Boeing, and the euro will give us better reserve currencies."
Never has a group of countries tried to introduce a common currency on such a scale without also forming a political union. Nor have political leaders worked together for so long to overcome historical divisions born of language barriers, cultural differences and war.
Yet with less than a week before European leaders reach their point of no return, the two most important nations are squabbling like jealous siblings. France and Germany are still fighting over who will run the new European central bank as well as about basic economic principles.
Huge gaps separate rich but sluggish economies like Germany's from poorer but booming countries like Spain and Ireland. Italy and Belgium continue to carry twice as much accumulated debt as most others and are obligated to make deep cuts in spending for years to come. If the euro maintains credibility, it could transform Europe into one of the world's biggest and most efficient marketplaces. A failure would be an economic and political disaster.
For all the uncertainty about the new euro market, one thing is clear: It will be huge. The economically cohesive Europe will have an economy almost as big as the United States' with combined annual output of $6.28-trillion versus $8.1-trillion in America. It will be the world's biggest single exporter and importer. And it will be the center of a $2-trillion bond market, virtually equal in size to the market for U.S. Treasury securities.
"It will be a major market, and it will appear on the first day of business in January," said Graham Bishop, an adviser to Salomon Smith Barney in London.