Chris Giles

On almost any reckoning, the launch of euro trading on Monday was a huge success. Stock markets across the eurozone rose by over 5%. The currency traded steadily on its first day; it rose a couple of cents against the dollar from its New Year's Eve closing price. It did not fall back as it suffered no loss of confidence nor did it continue to rise, which would have threatened the competitiveness of European exports.

And pricing stocks and trading in the new currency worked went without a glitch. Some had predicted problems so severe that central banks would be forced to shut down the markets.

But it's not all good news. Unfortunately, a successful start to trading in the euro should not be confused with success for the new currency, and the economies that have signed up. Two events will test the euro much more than the first few days of trading.

First, what will happen when the euro block of 11 countries faces its first economic crisis? For example if inflation starts to build up again in Euroland, the European Central Bank (ECB) will respond promptly by raising interest rates.

If it cannot successfully convince the public why it had to raise rates, it might well get the blame for the lower economic growth and unemployment that will arise in the short term. If the mud that will get thrown at the ECB sticks, the euro could be brought into disrepute.

The second major test will be getting the euro notes and coins in circulation. At the moment the euro is really only a currency used day to day by bankers and businessmen. Euro notes and coins will not exist until January 2002 and so until then most people in Euroland will be able to continue their lives as if the euro didn't exist.

The Deutschmarks, Francs and Lira in their pockets might simply be constituent parts of the euro - but in Germany, France and Italy it will not feel like this.

In 2002 when Germans have to start dividing everything they buy by 1.95583 to get the euro price, the French by 6.55957 and the Italians by 1936.27, public support for the euro might haemorrhage.

Of course the introduction of the euro will fundamentally change the economic landscape of the continent, but how much it does will be phenomenally difficult to measure. It might bring higher or lower unemployment in Europe, reduced price differences in shops across the continent or more harmonised taxes.

We will never know what would have happened without the introduction of the euro, so figuring its effect becomes a task for particularly sophisticated statistics, not simple figures like whether unemployment has gone down or up.

So what about whether Britain joins the euro. Tony Blair has written in the Wall Street Journal that "if the Euro works and the economic benefits are clear and unambiguous, we would recommend entry, with the British people having final say in a referendum".