The euro will replace the Deutschmark
as official currency in Germany
and the respective currencies in all other countries of the Euro Zone
by the year 2002. It is already legal tender
for financial transactions within the Euro Zone
. You can have your checking account listed in euros. The currency symbol for the euro is €.
The great promise of the euro is that it will create a huge common market, eliminate the cost of currency exchange as well as the risk of fluctuations in currency values. This should create an incentive for cross border investments and an overall integration of the European economies. The common currency is seen as yet another step in tying European countries closer together. The euro is also supposed to make cross-border shopping (including e-commerce) an everyday reality and level irrational price differentials between member states.
One major threat posed by the euro is the rather disparate economies of the member states, as well as fears of a weakening of fiscal standards and sanctions for member states in violation thereof. Imprudent fiscal policies in member states could severely hurt investor trust in the currency and beat down its long-term exchange rate with the dollar and yen. While the currently (Spring 2000) weak exchange rate seems to be fueling tremendous economic growth due to exports from the Euro Zone, a long-term weakness of the Euro could drive up inflation and force the European Central Bank in Frankfurt am Main, Germany to raise interest rates, stifling growth. Experts see the current weakness as a transient phenomenon not based in fundamental economic data, but rather a psychological one such as expressed in mhwang's writeup on the euro.
It will certainly be interesting to see how the euro fares over the next couple of years. One major short-term suckage for tourists from Europe and everyone living in the United States who gets paid in one of the euro member currencies (such as the Deutschmark) is that it makes everything so expensive. I remember when 1 US$ was worth only a sweet 1.50 DM, and not 2.19 DM, as is currently (May 03, 2000) the case.