Based on a speech delivered by Tommaso Padoa-Schioppa at the London School of Economics, 21 January,2002.

A unique opportunity came with the advent of euro banknotes and coins on 1 January 2002 to gain first-hand evidence on the foreign circulation of the euro. Evidence collected on this occasion suggests that the euro has smoothly and successfully replaced the legacy currency banknotes circulating...

The article analyses the behavior of an open economy in which wages are fully indexed to prices. It specifically deals with the dynamics of inflation, aggregate demand, balance-of-payments deficits and the public budget deficit.