The former German finance minister Theo Waigel, a champion of hard money, never doubted that monetary union would be a great success. "The euro will increase Europe's weight against the dollar and the yen," he predicted.
Since his pronouncement, however, the German mark has shrunk by nearly a third against the dollar, and shrivelled even in relation to Japan's ailing currency. There was a brief respite as the mark locked hands with the currencies of the 10 other EU states participating in monetary union. But then the euro started its slide - 23 per cent so far - taking with it the D-mark, the French franc, and other famously hard currencies entombed within the system. How much further can it go before triggering a crisis across the community?
Europe is again looking nervously towards Germany, where the D-mark was once regarded as a national treasure, and public opinion is not accustomed to declining exchange rates. The Germans had, after all, appointed themselves as custodians of the new monetary order, so any rebellion against EMU would also start there.
The signs are that it has begun. Public confidence in monetary union is dropping faster than the value of the euro, according to opinion polls. Opposition politicians are pointing accusingly at Chancellor Gerhard SchrÃ¶der and, worst of all, the powerful business lobby is up in arms.
Frankfurt and other centres of Germany's mighty economy had been strangely silent over the past months, or struggling hard to contain their delight. The low D-mark has been kind to Bavarian car workers and cruel to their rivals in Birmingham. Germany has an export-driven economy, and nothing drives exports harder than an undervalued currency.
But now the same German businessmen who have been gleefully raking in their export earnings feel that the party is getting out of hand. The price of imports is soaring, and threatens to fan inflation. German industry can live with that, but is not equipped to handle long-term instability.
It is for this reason that the two biggest German business organisations lobbed a grenade yesterday into the political arena, urging their government to stop Greece joiningeuroland. The assault was led by Hans-Olaf Henkel, head of the Confederation of German Industry. Reacting to news from Brussels that the European Commission was turning a blind eye to Greece's mountain of public debt, Mr Henkel lashed out. "Against the background of the weak euro, this would send out a disastrous signal," he declared. "The same convergence criteria must apply to Greece as those applying to other members."
The German Chambers of Industry and Commerce chimed in, pointing out that Greece's public debt exceeded 100 per cent of annual GDP. "To get even close to the 60 per cent set out in the Maastricht Treaty would require Greece to achieve many years of substantial budget surpluses," the organisation said.
Chancellor SchrÃ¶der's government cannot afford to ignore such opinions. Although the European Commission has recommended that Greece be allowed to subsume its drachmas into the euro next year, the decision has to be approved by member states. If the euro continues to struggle, Mr SchrÃ¶der, will be under intense pressure to veto Greece's entry.
Such a decision would stir up bad blood between Germany and other EU member states, and probably erode confidence in the euro further. For it is Europe's perceived disunity, or at least the lack of joint action in defence of the currency, that is blamed by many experts for the euro's woes. Another attempt at co-ordination will be made on Monday, when European finance ministers meet, but the omens are not good.
But maybe euro-inertia is not such a bad thing. The irony of the latest bout of soul-searching is that the euro's weakness is serving European economies well. According to the European Commission, the 11-zone bloc will soon be experiencing faster economic growth than the US.
What the currency faces, then, is not an economic but a political problem. Despite the declarations of the Lisbon summit, the markets have refused to believe that European economies are undertaking structural reform quickly enough. There is suspicion over the competence of the European Central Bank, which lacks the experience of the US Federal Reserve and its chairman, Alan Greenspan.
Officials in Brussels already sense the public losing faith. "From a psychological point of view," said one, "the only thing that worries me is the polls in Germany. They were always more sceptical and that appears to be returning."
Ironically, while German businesses take fright over the prospect of Greece's membership of the euro, the performance of their own economy has been one of the central causes of the weakness of the currency. Both this year and next the German economy is expected to grow at less than the European average. As one source in Brussels put it: "Germany has been lagging behind in economic performance, many would say because of the rigidities and slow progress of structural reform."Reuse content