Euro Makes A Strong Debut
Europe's new currency, the euro, made a strong debut Monday, trading at a high of $1.18 in a sign that markets welcomed the single currency as an alternative to the dollar. CBS News Correspondent Mark Phillips reports.
Demand for the euro pushed it up from an expected starting point of $1.17 in earlier Asian trading, and it kept on rising as trading moved to Europe.
Political and banking officials in Europe were heartened by the smooth entry on international markets of the currency shared by 11 European Union nations.
Jean-Claude Trichet, governor of the Bank of France and a former candidate for the post of European Central Bank chief, said trading represented "the best possible omen."
"The euro has been greeted well," he said. "This isn't just an absurd craze."
German Chancellor Gerhard Schroeder said the euro offered "friendly" competition for established currencies and would strengthen Europe's profile in international financial markets.
French Finance Minister Dominique Strauss-Kahn focused on the unity created by the euro, saying it would help boost growth and cut unemployment in Europe. "When everybody pushes in the same direction, everybody goes quicker," he said.
Notwithstanding the positive market and political reactions, euro skeptics made their mark, throwing two pies at Dutch Finance Minister Gerrit Zalm as he arrived at the Amsterdam Stock Exchange.
Euro trading opened Monday in Sydney, Australia, and proceeded smoothly, if quietly, throughout Asia and Europe.
The euro was officially launched Jan. 1, when authorities fixed conversion rates against the 11 participating European currencies. While the euro will not be in consumers' pockets until 2002, it now can be used for non-cash, credit card or traveler's check purchases. Many major firms are converting their transactions to euros, as well.
It was all work and no play during the long holiday weekend. In London alone, an estimated 50,000 bankers and traders made final preparations for the beginning of a new economic era.
It was still dark in the financial district of downtown Sydney when trading began between banks, but lights could be seen from some of the brokers' offices in skyscrapers.
Banks traded the new money without any of the feared technical glitches. People may find the adjustment harder.
"The customer still does not know what a quart of milk should cost in euros. They still have to make a lot of mental calculations to work out what is a correct price for a product that they're used to consuming," says Peter von Maydell head of foreign exchange for Credit Suisse First Boston.
Many banks had spent the New Year's holiday weekend preparing to launch the world's euro trading, and speculation ran high in Asian newspapers on Sunday about just what the new currency would do to this region's troubled economies.
The 11 European nations that launched te euro Friday represent 20 percent of world economic output, 18 percent of world trade and they will be a powerful player in the world economy.
In fact, one goal of the euro is for it to help the European Union forge a common market that is able to stand its ground against the United States and Asia.
For the first time in decades, the U.S. dollar will have a rival as the currency of choice for world trade and government reserves, a real change in Asia, where it has long been dominant.
The English haven't decided whether they'll join the euro, but even in those countries which have joined the physical money won't be in circulation for three years. For now it'll be used in credit card and banking transactions only. Euro bills and coins will not be introduced until January 2002.
The 11 nations adopting the euro are Austria, Belgium, Germany, Finland, France, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain. But Sweden, Denmark and Britain opted to stay out for now; Greece did not qualify.