States, the current year's surplus did not take account of future obligations, when the flow of pension funds was really in deficit. Nevertheless, this event didn't matter, since both France and Germany are obligatory in the union, for financial backing. Even so, Germany believes that the new European Central Bank will conduct policy much like the Bundesbank. The third stage began during January 1999, at which time countries will change their currencies to the new Euro after which national currencies will be phased out during a transition period. During transition, the Euro and the national currency will both remain in circulation. Government bonds will be denominated in Euros, and some countries, like France, will convert existing debt to Euros. The EMI in Frankfurt will be transformed into the European Central Bank, which will determine the common monetary policy. The current head of the central bank of the Netherlands, Wim Duisenberg, is expected to become the first president of the ECB. (Santer, Jacques)Currently the Euro currency is in a three-year transition period until 2002. Right now European companies are converting their accounts to Euros, and in 2002, Euro notes and coins will be circulated in the different countries. However, there is still discussion of what the coins will look like and whether coin sizes will fit into each countries individual telephones and vending machines which are measured to old currencies. Also, it is still controversial whether the conversion of ECUs to Euros will take place at the market ECU value, or at the ECU value fixed on paper which is calculated from ECU central rates. So far market rates are being used for the conversion.Europe is now going headlong into the change to a united currency under the new European monetary system within the union. They have already received the backing of national banks, and are already prepared for the significant change to take place. Luxembourg, for exampl...
