January 4, 1999 was the first official date of the Euro, the new currency of the European Union. The Euro was highly anticipated among the countries of the European Union, yet now has apparently fallen short of these expectations. The Euro which was expected to rival the U.S. dollar has steadily declined in value since its implementation in January 1999.

"In the two months since the European single currency was introduced, pretty much the only direction it has moved on the charts is down. From a buoyant and technically smooth start up on January 4, the Euro has steadily slipped against the United States dollar. An initial exchange rate of $1.17 is now around $1.04."

Many of the countries in Europe were hoping that the Euro would pull the failing economies back into prosperity. Countries such as Spain and Germany who are suffering from incredibly high unemployment rates thought the Euro would be an excellent way to stabilize their economies.

Carey Reed, a junior at La Salle, spent the fall semester in Spain and said that she found that the majority of the Spaniards that she spoke to were very excited about the Euro. The Euro was a popular topic in the news and it began to be circulated before January. The option was given in most bars and restaurants to use the Euro, and also calculators were being marketed to help people figure out the conversion.

"Not to sound too pessimistic, but I think that Spain and the other countries in Europe are putting too much hope into the Euro. I think they are expecting it to rival if not supersede the U.S. dollar because there are so many countries backing the Euro," Reed stated.

The Euro is the first step toward European political unification and the decline in value may be an indicator of problems that could occur in terms of political unification. In fact, disagreements on some political issues may very well have caused the decline in the Euro. It is difficult to place faith in this currency which is based on 11 nations and their leaders agreeing on some very specific ideas. The countries which are further relinquishing sovereignty with the hopes of possibly challenging the United States as the sole hegemonic power, according to C. Fred Bergsten.

"Some experts and political leaders also warn that the financial markets may have been unnerved by the recent squabbling among European political leaders over monetary policy, farm subsidies and budget cuts. `You can't get around the fact the Euro is the economic component of a blueprint for political unification,` said Graham Bishop, an adviser on the single currency to Salomon Smith Barney. `If you see disarray at the heart of the political process, that ought to make people nervous."

Although the Euro seems to be experiencing some problems now, experts are predicting that the Euro will go back to its original worth of $1.17. They do warn that it may dip further before it gets better, but chances are the Euro will recover and hopefully reach the high expectations many have for it.

Andrews, Edmund L. "Currencies; The Euro Falls, And Some Find Economic Fault." New York Times March 3, 1999, late edition: A1.

Swardson, Anne. "In Europe, a More Perfect Union? Corruption Probe May Benefit Quest For Integration." The Washington Post 22 march 1999, final edition: A1.

C. Fred Bergsten. "America and Europe: Clash of the Titans?" Foreign Affairs 78.2 (1999): 20-24.

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