Europe

But the biggest mystery lies in the four speckled boxes at the bottom of the note's hi-tech iridescent stripe.

The large one contains a representation of French Guyana. The three smallest boxes contain seemingly meaningless dots representing the farthest reaches of the eurozone: the Caribbean islands of Guadeloupe and Martinique, and the Indian Ocean island of La Réunion.

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In fact, thanks to a three-hour time difference, La Réunion will be the first territory to use the euro on 1 January. One Banque de la Réunion official tells of the CFA (African) francs dug from gardens and brought in still smelling of earth for conversion to the French franc 25 years ago.

The experience is likely to be repeated across the world in the French départments where the franc is legal tender. The Banque de France is responsible for the logistical challenge of preparing these far-flung parts of the French empire for the euro switchover. It has printed one explanatory brochure in Taki-Taki, the local language of 20,000 people in the far reaches of French Guyana. Similarly the Banco de Espana will bring the euro to the Spanish enclaves of Ceuta and Melilla in northern Africa.

'These are territories of the European Union,' said a spokesman for the European Central Bank. 'I'm not even sure the logistics are more complicated: there are thousands of islands in Greece; these places are just further away,'

But the economic implications of the euro are being felt even beyond the distant Dom-Tom - French overseas departments and territories.

Seventy million citizens in Francophone countries of Africa already have their interest rates set by the ECB in Frankfurt. There is no prospect of the euro circulating as legal tender in the zone's 14 countries - Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal, Togo, Congo, Cameroun, Gabon, Equatorial Guinea, the CAR, Chad, and the Comoros. But linking the CFA franc zone to the eurozone did cause some discomfort in the EU.

‘The CFA franc was tied to the French franc [1 Ffr to 100 CFA francs] and this has been translated to a peg to the euro. The real peculiarity of the CFA zones is that there is a French Treasury guarantee on the peg,’ says Charles Wyplosz, a leading monetary economist at the Centre for Economic Policy Research.

The French government undertakes to provide euros to the central banks of these African nations should there be a speculative attack. But it is the French Treasury and taxpayers who have made the promise, rather than the Banque de France, which keeps the system consistent with EU law. The German government had worried that huge bail-out costs could destabilise the entire eurozone. However Wyplosz says: ‘This undertaking may look enormous, but the amounts involved are peanuts.’

Supporters of the peg say the CFA zone is the only part of Africa without serious inflation, but critics note that the economic performance of the zone has been bad, particularly during periods of franc overvaluation.

Logistics are a little bit more complicated away from the vestiges of the European empires. In eastern Europe, many local currencies are pegged to the Deutschmark, or it is widely used as a parallel currency. The Bundesbank estimates that between 30 and 40 per cent of German banknotes - worth €50 billion - are held abroad. A quarter of these are in Turkey. The mark is an unofficial second currency throughout the Balkans, and legal tender in Kosovo and Montenegro, where formal changeover programmes are proceeding. The Bundesbank and ECB are running an information programme in 16 other countries that border the eurozone. Leaflets and posters have been printed in 23 languages, including Russian, Serbo-Croat, Albanian and Turkish. Each features the slogan: ‘The euro is coming. The Deutschmark is going, the value is here to stay.’

Commerzbank, the leading German financial institution, feared that the euro might slump in value if uncertainty in mark-using economies caused a rush to the dollar or Swiss franc.

The ECB has allowed the advance distribution of euro notes to foreign banks without charging interest and has held training sessions for teams from countries outside the eurozone.

And what of the 12 accession countries - those whose applications to join the EU have been provisionally approved? Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, the Slovak Republic and Slovenia will have no opt-out from the single currency if their membership of the EU is ratified. Neither would they want one. But some, such as Estonia and Bulgaria, have openly discussed unilateral 'euroisation' - effectively sidestepping the convergence requirements and fiscal retrenchment required by the European Commission.

Estonia operates a currency that is effectively a mark - and now a euro. It has no independent monetary policy, but this is still short of full euroisation.

‘Their best step would be to adopt the euro unilaterally,’ says Wyplosz, 'but EC rules prevent it, which I find preposterous.’

The ECB has fired a shot across the bows of those countries considering unilateral adoption of the euro. Only last week it completed its own survey of monetary and financial institutions in the accession countries. The Frankfurt-based bank is keen to protect the primacy of the strict convergence processes. So Estonia may have to abandon its currency board before meeting the criteria for EU entry, and then enter ERM II (the successor to the original Exchange Rate Mechanism) for two years.

‘Euroisation would sidestep the Commission's initiation rights, but a reasonable way [for the Commission] to respond is that if you unilaterally euroise, you do so at your own risk,’ Wyplosz says.

All the accession countries will benefit from stable exchange rates, but they are very different from the rest of the union. Says Wyplosz: 'They're fast growing and naturally tend to have more inflation, which is going to make it hard to meet convergence criteria. In a way they will resemble the CFA zone - once they are in the monetary union, they lose monetary policy, and have to accept shocks on growth.' In other words, they will not have the flexibility to prevent any overvaluation of the euro slowing down their economies.