On January 1, 2002, more than 300 million European citizens saw the euro turn from a virtual currency into reality. The entry into circulation of euro notes and coins means that European Monetary Union (EMU), a project devised by Europe's political elite over more than a generation, finally came down to the street. The psychological and economic consequences of the launch of Europe's single currency will be far-reaching. It will mark the final break from national currencies, promising a cultural revolution built on stable prices, enduring fiscal discipline, and lower interest rates.
             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 achieving monetary union within a decade.
             The first oil crisis and the collapse of the Bretton Woods system in 1972-73 sabotaged the Werner plan, but Europe's search for currency stability received a fresh wind in 1979 with the creation of the European Monetary System (EMS). This time the plan was the result of intense cooperation between Valery Giscard d'Estaing, president of France, and Helmut Schmidt, chancellor of Germany, supported by Roy Jenkins, a former British treasury secretary who had come to Brussels to serve as president of the European Commission.
             The EMS was built on the concept of stable but adjustable exchange rates, which led to the creation of the so-called "snake," which allowed cur...