The countries joining Europe's Economic and Monetary Union (EMU) have announced the conversion rates for moving their old national currencies into the single currency, the euro.

It is one of the last steps towards monetary union, which is now only hours away. At midnight local time, just when the New Year parties get really going, 11 European countries will embark on their biggest economic venture this century and merge their currencies into one, creating the euro.

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The rates were announced at a meeting of central bankers and EU finance ministers in Brussels. Jacques Santer, the president of the European Commission, said the launch of the single currency was a historic event, which would bring stability and growth to Europe.

One euro will be worth

• 6.55957 French franc
• 1.95583 Deutschmarks
• 1936.27 Italian lira
• 40.3399 Belgium (and Luxembourg) franc
• 166.386 Spanish pesetas
• 0.787564 Irish punts
• 2.20371 Dutch guilders
• 13.7603 Austrian schillings
• 200.482 Portuguese escudos
• 5.94573 Finnish markas

• 1130 Central European Time (CET) - 1030 GMT: European central bankers conducted their regular "concertation procedure" to establish the market value of the European Currency Unit (Ecu). The single currency will replace this basket of European currencies on a 1:1 basis.
• 1230 CET - 1130 GMT: Based on the value of the Ecu the European Commission calculated the euro-value of each currency joining EMU. The Commission will then formally propose the conversion rates to the Council of EU Finance Ministers for approval, and publicise its suggestions on the Internet.
• 1330 CET - 1230 GMT: The ministers will adopt the new rates during a televised session. As soon as they have agreed on the rates, the figures will be made public on the Internet.
• 1500 CET - 1400 GMT: The conversion rates will be formally published in the Official Journal of the European Communities in Luxembourg and on the Web.
• On 1 January 1999, at midnight local time of countries joining EMU , the conversion rates - and monetary union - will come into force.

Currency speculators will not be able to force any last-minute changes in EMU conversion rates, because the relative values of all participating currencies were already fixed at a EU summit in May this year.

What next?

At first monetary union will not appear to bring much change. Consumers and shops will continue to use the old national currencies for another three years, and nobody can be forced to use the euro if they don't want to.

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Nonetheless, monetary union is already a reality. The exchange rates of all EMU currencies will be "irrevocably" fixed. Old currencies like the guilder, the franc or the escudo will be denominations of the euro, just like the cent to the dollar or the penny to the pound.

The real impact of monetary union will be felt on the world's financial markets and in the banking system - after a three-day delay because of the New Year weekend.

From Monday, 4 January 1999 onwards all financial transactions going through banks in the eurozone will be denominated in euros. This will affect all share dealings, currency transactions and money transfers.

Investors and bankers will therefore be the first to see the difference, as all share prices will be quoted in euros.

Retailers accepting the euro will show this sign

Consumers will feel the benefits when they go on holiday in the 11-country Euroland. Exchange rate fluctuations will be a thing of the past and banks will not longer be able to make profits from changing travel money.

Euro coins and bank notes will be introduced during spring 2002. The three-year delay is designed to give consumers and companies a bit more time to get used to new euro prices. During this time more and more businesses will have "dual pricing" in the old national currency and the euro.

From July 2002 onwards the euro will be the only legal tender in the countries of the eurozone.

Benefits and threats

Europe's monetary union is a huge economic experiment. Nobody really knows what is going to happen.

The fans of EMU say that it will cut trading costs and create a true single market. This could unleash a new economic dynamism that will strengthen companies, create jobs and ensure a stable monetary environment that can insulate Europe better from external economic shocks. They predict that prices in many EMU countries will come down and boost the spending power of consumers, which in turn will help the economy.

The critics of the single currency say that it is the first step towards a closer political union, creating a European super state. They warn that a centrally set interest rate will not suit all regions of the eurozone and could actually increase the economic tensions in Europe.

Whatever the outcome, no move towards integrating Europe has ever been so bold. The governor of the French national bank likens it to launching a rocket, others say they are thrilled that a project talked about since the 1960s and long doubted is now happening.

The euro and its guardian, the European Central Bank, will now have to prove themselves in the global economy and the world's financial system.