Although 2000 was a tough year for the European Union's single currency, the euro, financial specialists are warning that 2001 could feature a grudge match between the U.S. dollar and the euro.
In January, Greece becomes the 12th nation to join the eurozone, officially accepting the new currency. The move follows a long period of reforms to meet the European Union's economic criteria, including low inflation rates, reduction of key interest rates, price stability and an acceptable deficit.
Europe's top central banker, Wim Duisenberg, welcomes the development as an historic moment. "We have to say that Greece has made great efforts and commendable efforts in order to reach this stage," he says.
Mr. Duisenberg also says the euro seems to have turned the corner against the dollar, after falling in value during much of 2000. The euro as already crossed $0.93, and some analysts say it could exceed $1.00 over the next 12 months.
Several factors are helping the euro. Oil prices have come down, giving a significant boost to the energy dependent European economy. In addition, the once threatening American economy is slowing, giving a relative boost to Europe. The U.S. stock market, which had fueled American growth through the so-called "wealth effect," is down, putting a further drag on the U.S. economy. The wealth effect refers to extra money generated by a rising stock market.
Presently the euro is only a theoretical currency, and people do not have the money in their pocket.
The euro, which was officially launched one year ago, is used in business-to-business and some banking transactions. Euro bank notes and coins will not be introduced until January of 2002.
Governments are preparing their people for the new money. In shops across Europe, prices are displayed in both euros and local money, to help people think in terms of the new currency. Citizens in the eurozone have been getting their utility bills and bank statements in both their national currency and the euro.
Sweden, which holds the rotating European Union presidency for the first half of 2001, is not in the eurozone. Polls in Sweden show that more than 60 percent of the population oppose the currency, but the government says there will be no referendum before 2002. Denmark is also staying out of the euro. Britain is sitting on the fence, saying it could join the currency plan in the future if a series of economic conditions are met.