March 4, 2002	Monday	Zilhaj 19, 1422

BY THE beginning of March 2002, around 300 million people all over Europe will be using a single currency—the euro. The dream of economic and monetary union is thus expected to become a reality within a or so.

Even in those European countries, which had decided to retain their currencies for the time being, Euro is likely to be accepted willingly. According to a Business Week Report, published in its issue of January 21, 2002 major British Departmental Stores such as Harrods and Marks & Spencer were happy to accept the new money. Similarly, many tourist establishments in Switzerland also, accepted the new currency willingly.

The physical euro was expected to bring many benefits to the 12 euro-zone economies of the EU. In the first place, all the business transaction among the member states will now take place in one common currency, which undoubtedly has its own advantages. Secondly, it was understood that there would be unchecked movement of capital and tariff-free trade among the member countries. Thirdly, there would be free movement of labour between one euro-zone country and another.

From a tourist point of view, instead of keeping track of different exchange rates the tourists would now be able to use the same money from the south to the north of the continent. Besides, they would have to pay only one commission when converting their currency into euros.

In addition to the above-mentioned favourable environment, money was presently being switched back from elsewhere into Europe, contrary to the trends prevailing two to three years back when euro-zone companies and investors had invested more than $450 billion into US assets, bonds and equities. Starting from July 2001, the six-month average of portfolio investments into Europe had turned positive, according to latest Business Week reports. According to these reports, more than $90 billion had moved from abroad into the euro-zone equities in the five months July-November 2001.

Over and above all that, many countries had lately decided to maintain a certain percentage of their foreign exchange reserves in euro. According to reports appearing in the US Press recently, the officials at China’s Central Bank. the People’s Bank of China, had stated that they planned to buy more euros, which would reduce their dependence on reserves in US dollars. There were jubilations among currency traders in London and Frankfurt over the report and the traders were looking forward to an upsurge in market activities soon. Likewise, according to other reports, Japan was also contemplating to keep a certain percentage of its foreign exchange reserves in euro. Even, smaller countries like Pakistan were thinking that since euro had now become a reality, they should maintain a certain percentage of their foreign exchange reserves in the new currency, in order to ensure stability of their exchange rate vis-a-vis euro.

All these positive factors should have had a favourable effect on the euro. B