FRANKFURT, Jan 1: The European Central Bank can pat itself on the back for successfully bringing off the biggest monetary changeover in history with the rollout of euro cash.

But the ultimate success of the new currency may still depend on whether monetary union can lead to greater economic and political integration within Europe.

By midday on Tuesday, just 12 hours after the single currency became legal tender for 304 million people across the entire euro area, no major glitches had been reported in the changeover process so far, a staggering achievement given the scope and complexity of the operation.

An ECB spokeswoman said that already between 50 and 85 percent of cash machines in all 12 participating countries had been successfully switched over and that proportion would rise even further by the evening.

The ECB was not scheduled to make its first full assessment of the process so far until Thursday.

Already, President Wim Duisenberg had cautioned on Tuesday that some problems are bound to occur here and there. It could not be otherwise in such a vast undertaking. But I’m convinced that they will be limited in scale and that we will tackle them.

The ECB badly needed a few feathers to stick in its cap after coming under heavy fire during the first three years of its existence.

The fledgling institution itself was blamed for the long slide in the value of the euro against the dollar on the world’s foreign exchange markets since the single currency was officially born on January 1, 1999.

Its critics lambasted the bank’s monetary policy decisions and sniped at its communications policy and laid much of the blame at Duisenberg’s door.

One interest rate across 12 economies with different structures can result in one country having a higher or lower rate than local conditions require, resulting in inflation or unemployment, particularly if economic policies are not converging.

This is a particular concern in Britain which, while rejecting membership of the euro zone, is itself a 300-year-old currency union. The German mark and Italian lira were the results of monetary unions, and Belgium and Luxembourg used the same currency.

With the arrival of euro banknotes and coins set to become an outright success, a sea-change appears to be emerging in European public perception of the euro. Opinion polls show that people are feeling increasingly enthusiastic about the currency now that they can actually hold it in their hands.

On the forex markets, too, the euro has rallied from a long fall and is holding steady at about $0.89-0.90.

European officials insist that, even at these levels, the euro is still undervalued and should continue to rise as people get used to the feel of the new notes and coins.

But for that to be truly the case, Europe still has a great deal more work to do. And that is likely to be the tack the ECB takes when it convenes for its first policy-setting meeting on 2002 on Thursday.

Few ECB watchers are expecting any further cuts in euro-zone interest rates so early in the year.

The bank, glorying in the success of the euro cash rollout, is likely to use the opportunity to urge governments to do more to get their economies and finances in order.

But with most people still not used to the idea of saying goodbye to their national currencies, that might be too tall an order for many Europeans just yet.—AFP