The idea of one central bank setting interest rates for economies as diverse as Portugal and Germany is daunting, although the EU governments have made much progress in recent years getting their economies and finances into line. But it is above all a political project, since it is politicians who decide which countries join the currency union. Italy and Belgium were let into the initial euro group despite gravely overshooting government debt limits set by the Maastricht Treaty. Italy demonstrated a strong desire to be a part of the euro launch group, even indicating willingness to levy a euro tax, for instance, to try to meet the fiscal guidelines. And many say it would have been awkward not to include Belgium, which has long kept its currency closely tied to the mark and is, after all, seat of the EU Commission.
Political strains are still evident, even between key players such as France and Germany.
At a time when the focus should have been establishing the ECB's credibility and independence, nominations for the presidency of the new central bank became embroiled in an embarrassing political fight. The compromise that resulted in Mr. Duisenberg prevailing is a messy one that has continued to spark political spats. Nevertheless, even Europe's most conservative central bankers say the euro can succeed if national governments exercise fiscal restraint. Already, the ECB has begun cautioning governments to tighten their budgets. Aalund is a staff reporter in The Wall Street Journal's Frankfurt bureau.