International Forum: Comprehensive View of the Euro ����The single European currency, the Euro, has been launched officially since the New Year's Day. We should have a comprehensive view of the advantages and disadvantages of the Euro, especially the disadvantages so as to avoid the negative effects. ����First, we must consider the issue of international financial exchange rates. The launching of the Euro will break the hegemonic status of the US dollars and become a balancing factor, which is good for maintaining the stability of the international financial system. Nevertheless, the Euro will trigger the re-organization of the international financial capital, which will lead to the turbulence of the international financial environment, especially during the period stretching from now until 2002. Hence, in this special period, the risk will increase in the fields of foreign exchange reserve, foreign settlement of accounts and lending and borrowing. ����The second issue is exports to Europe. The single currency will boost the enlargement and development of the economy, which will increase the import volume. However, the launching of the Euro will first promote the trade development in the region due to the reduction in the trading cost, convenient circulation of commodities and removal of the risk of exchange rates. These factors will result in reducing the need of the goods from outside the Euro zone in addition to the annexation of the enterprises. ����The third issue is attracting European capital. After the launch of the Euro, the foreign exchange reserve of the Euro-zone nations will be redundant and become a new source of investment fund. Under the surging tide of merging, big and small enterprises are all seeking development outside their countries, but the integration of the capital market and the trend of the strengthening Euro will attract more foreign investment. Some Euro-zone nations' investment in other countries might also be withdrawn. ����Finally, the enterprises outside the Euro-zone have to readjust their accounts, update technology and equipment and train personnel. The income from exchanging former European currency has also disappeared. All this is the price paid for starting up the Euro. ����We need time and experience to judge the debut and influence of the Euro. The most important thing is the advantages of the Euro will first belong to the Euro-zone countries and exert an impact on other nations, because the European currency union was proposed in the interests of the EU. ����There are some uncertain factors for the Euro. The birth of the Euro is a product of political compromise, and the economic situation in Europe is not very optimistic. Although the Euro-zone nations have lost the independence of currency policy, they can still decide their financial policy. We cannot predict whether a country will use political power to attack the single currency while its own economic interests contradict the single currency policy. ���� WorldNews 1999-01-08 Page6 Full Story in Chinese