After new currency’s smooth entry, let’s focus on political implications

Europe enthusiastically welcomed its new currency. The day that the euro, until now a «virtual» currency, was transformed into real banknotes and coins, fired optimism about a European regeneration. The new currency, a symbol of hopes for greater stability and economic growth, was also well-received by the market. Even countries outside the eurozone, especially Eastern European ones, appear willing to adopt the euro in their everyday transactions or as a reserve currency. In all 12 eurozone countries, the arrival of the new year, which coincided with that of the euro notes and coins, was celebrated in some unusual party venues – the countries’ central banks. Citizens lined up at ATMs to be among the first to get hold of the new euro notes. In all countries, and Greece was no exception, there had been fears and worries about the transition to the new currency. The catastrophe expected by some did not take place. Yesterday, the first working day with the euro in circulation was almost like every other day. «Almost» because of the very real nervousness with which many people, including private and state employees, conducted their first transactions in the new currency. The euro entered the lives of ordinary citizens without any great friction, however, everyone involved was anxiously trying to «think in euros.» People who were used to exchanging thousands of drachmas daily – the legacy of our inflation-riddled past – were trying to now think in single figures or in the tens, at most, plus the currency subdivisions, which had disappeared from the national consciousness long ago. This is just one of the many novel ways of thinking that the new European currency introduces. Obviously, the difficulties of the early adjustment period are not over yet. Many small firms, for example, are still living in the age of the drachma. Until the end of February, people will still be able to use drachmas in almost all their transactions. The old currency will be gradually withdrawn over the next few weeks. When we begin to count our incomes in euros, we will have truly entered the new era. Adjusting to the euro is inevitable. Still, this is only the first step. A monetary union without a political union looks like a step suspended in mid-air. Our attention will increasingly turn toward the political repercussions. Investment will be the strongest factor sustaining domestic demand, according to the report. Gross fixed capital investment is projected to grow by 9.5 percent this year, and by 9.9 and 7.4 percent in 2003 and 2004 respectively. According to the review, domestic demand remained at high levels in 2001, largely as a result of falling lending rates. Within 9 months last year, short-term lending rates for businesses, private consumption and mortgages all fell by 400 basis points, compared to an average of 200 in the 1995-2000 period. Nevertheless, the growth rate of private consumption last year is estimated to have fallen slightly to 3.1 percent, mainly due to a decrease in new car purchases.

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