The origins of the euro go back to the late 1960s, when the Europeans were searching for a response to the upheaval in the Bretton Woods system, in which the US dollar was the dominant currency.

The first step came at the Hague summit in 1969 when t the founders of the European Union (France, Germany, Italy, Belgium, Luxembourg, and the Netherlands) ordered a feasibility study on monetary union. The goal of a single currency had been mentioned obliquely in the 1957 Treaty of Rome, the Union's founding treaty. But it took an inspirational intervention in 1970 from Pierre Werner, Luxembourg's prime minister, to produce a three-stage plan for ach

Jacques DeLarosiere, former governor of the Bank of France and later head of the International Monetary Fund, is said to have remarked that EMU once and for all would release France from Frankfurt's dominance. This meant that he would never again have to receive a call from the Bundesbank effectively dictating to him the level of French interest rates. Despite Mitterrand's strategic calculations, the Maastricht Treaty barely passed in a September 1992 referendum in France. The marginal victory from the French population came amid a period of tremendous currency turmoil as speculators attacked currencies that they believed could not sustain parity with the deutsche mark.

In May 1998, the heads of government decided that eleven countries, France, Germany, Austria, Belgium, the Netherlands, Luxembourg, Finland, Ireland, Italy, Spain, and Portugal, had met the Maastricht criteria. Some countries only squeezed into the EMU club thanks to a liberal interpretation of the entry criteria. For Italy, however, with its huge public debt and its rocky record in the management of public finances, it was an historic achievement. One last conflict arose over the selection of the president of the new European Central Bank. Wim Duisenberg, the long-serving head of the Dutch central bank, was the firm favorite, strongly supported by the Germans. But at the last moment, President Jacques Chirac of France put forward Jean-Claude Trichet, governor of the Bank of France.

In addition, the center-right coalition government in Germany, partly to moderate domestic public opinion and the Bundesbank, unveiled proposals for a so-called "Stability Pact" to enforce budgetary discipline in the future euro zone. Arguments over the precise terms of the pact led to several titanic clashes between the French and the Germans. The French wanted more political discretion over fiscal policy; but the Germans wanted to export their stability culture, primarily through the creation of an independent central bank and a set of automatic penalties against fiscal miscreants.

In mid-1997, the terms of a deal were reached but only after a scare created by the election of a Socialist led government in Paris, which had previously voiced doubt about the Stability Pact. At the Amsterdam summit, Lionel Jospin, the Socialist French prime minister, struck an agreement that renewed the agreement, now called the Stability and Growth Pact.

In 1983, France faced another devaluation of the franc. President Mitterrand had flirted with "Socialism in one country," refusing to accept that this was an out-of-date notion in an increasingly integrated European economy. Jacques Delors, his centrist finance minister, told him the hard truths of economic interdependence. The Socialist government resolved to pursue a franc fort policy based on a sound currency that would commit to preserve its value against the deutsche mark without engaging in competitive devaluations. Delors went on to be chosen as president of the European Commission in 1984 and took up the office in Brussels the next year. After a hesitant start, he launched the program for creating a single European market that would lead to the free circulation of capital, goods, and services by 1992. Alongside the 1992 program came the influential "Cecchini" report written by experts in the European Commission, which argued that a single currency would enhance the benefits of the single market because it would save transaction costs.

Not that a weak euro has done much damage to the euro-zone members. In fact, it has made their products more competitive on world markets, especially compared with dollar-priced goods. Its weakness helped German exports grow by 5.1 percent in 2001 when world trade was faltering, following a 13.2 percent surge in 2000.

The arrival of the "real" euro is already having a positive impact on company strategy. For example, Japan's Canon, one of the world's biggest manufacturers of ca

Some common words found in the essay are:
ERM August, Maastricht Treaty, Japan's Canon, Worse Germany, Cooperation Development's, July November, Maastricht Treaty's, Kohl Germany, Union EMU, European Commission, monetary union, euro zone, deutsche mark, single currency, stability pact, central bank, exchange rate, january 1, euro notes coins, 3 percent, single market, january 1 1999, economic monetary union, value deutsche mark, gross domestic product,
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Approximate Pages = 12 (250 words per page double spaced)