This has been a shocking week for proponents of a single European currency - perhaps the worst week since July 1993, when turbulence on the currency markets blew apart the European Union's Exchange Rate Mechanism.
Private bankers and economists now are openly questioning whether the EU will meet its target of launching monetary union in January 1999. The date remains sacrosanct to politicians in many EU capitals as well as to the European Commission, but the economic and political obstacles are looking increasingly formidable.
The four countries most directly involved in the crisis - Germany, France, Italy and Belgium - were all founder-members of the original European Economic Community in 1957, an indication that the dispute over monetary union reaches to the core of the EU's identity.
The problems concern German political attitudes to a single currency, the economic performance of France, Italy, Belgium and other prospective participants, and the issue of persuading parliaments and public opinion to go ahead with the project. But there are other unresolved matters: what to call the single currency, how to introduce it as legal tender, and how to manage the exchange rate and trade relationship between countries in the monetary union and those - probably including Britain - that will stay outside.
The week began badly when the Commissioner for monetary affairs, Yves- Thibault de Silguy, rebuked the Swedish government for saying Sweden's entry into monetary union would be subject to ratification by the Swedish parliament. Mr De Silguy noted sternly that only Britain and Denmark had negotiated the formal right to opt out of the project if they wished.
What Mr De Silguy did not mention, however, was that under the terms of Germany's ratification of the Maastricht treaty, the two chambers of the German parliament must agree that the "convergence criteria" have been fulfilled by all participants before monetary union can go ahead. These criteria include low inflation and interest rates, upper limits on budget deficits and public debts, and two years of exchange rate stability in the ERM.
For some time, Germans have been suspicious that they are being asked to give up their hallowed Deutschmark for a European currency that will be infected with inflation and instability from other countries. The latest poll by Eurobarometer, an EU research group, shows 50 per cent of Germans against a single currency and 38 per cent for, virtually the same levels as in Britain.
As a result, the German government and Bundesbank have stressed this year that there must be no bending of the Maastricht criteria to favour certain countries. Indeed, Germany's Finance Minister, Theo Waigel, said that, as regards budget deficits, governments should aim for a level even lower than that set out in Maastricht.
On Wednesday he went further than any German minister had previously gone by naming Italy and Belgium as countries whose budgetary discipline was so lax that their entry into a single currency in 1999 was doubtful. Some economists say he could have gone further by questioning France's ability to make the grade.
The French government announced a budget on Wednesday designed to cut its deficit and meet the Maastricht criteria by 1999, but the foreign exchange markets are not wholly convinced. They are asking both whether the deficit reduction measures are sufficient, and whether France can tolerate an unemployment rate of roughly 12 per cent as the price for joining a single currency.
France, Belgium and Italymay hope to exploit a loophole in Maastricht that allows countries to join a single currency if they are making clear progress towards the target of cutting budget deficits to 3 per cent of gross domestic product and public debts to 60 per cent of GDP. But it is this loophole that Mr Waigel intends to close by demanding strict observance of the treaty.
The real problem for the EU is that Mr Waigel's demand for extra budgetary discipline may be incompatible with President Jacques Chirac's commitment to achieve a significant fall in French unemployment. If Mr Waigel does not back down, Mr Chirac could threaten to reject the 1999 date for starting the single currency.
But if Mr Chirac seeks a favourable interpretation of the Maastricht terms for France, the German parliament could block the launch of monetary union. Add to this the fact that Italy and Belgium could try to paralyse EU business if they are excluded from the single currency in 1999, and the European Union has a potentially gigantic crisis on its hands.