The euro was born as the stroke of midnight ushered in the New Year, giving a huge swath of Europe a common currency for the first time since the Roman Empire.

European Union leaders hailed the launch of the euro, which many believe will come to rival the US dollar as a trading and reserve currency, as historic and a great day for Europe.

"The euro is more than just a monetary instrument. It heralds a new departure for Europe," European Commission President Jacques Santer told a news conference. "I believe, with the euro, Europe will be present on the international stage much more," he said.

Santer and several other European leaders made clear they saw the euro as a step to greater political integration in Europe, ravaged by two world wars this century.

Euro notes and coins willnot circulate until 2002. Until then, the currency will be used mainly for electronic transactions. Consumers will be able to have euro-denominated bank and credit card accounts, mortgages and travellers' and personal cheques.

Nonetheless, the euro is now the official currency of a vast area encompassing Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

EU leaders drank champagne and children released thousands of balloons on Thursday after finance ministers took the last step in the euro's creation -- setting the rates at which the 11 national currencies will be forever fixed against the euro.

The launch of the euro crowns years of preparations and turns long-cherished dreams of European visionaries into reality. Critics, however, see it as a leap into the unknown.

The birth of the euro was clouded by a row between France and Wim Duisenberg, head of the new European Central Bank which will set interest rates for the euro zone, over when theDutchman should quit his post.

Duisenberg declined to elaborate on remarks he made to French newspaper Le Monde making clear he had no plans to step down in 2002, as France expects, to make way for Bank of France head Jean-Claude Trichet.

All eyes will be on Monday's start of trading in the euro to see how it performs against the dollar and other currencies. With the locking rates announced, up to 50,000 staff at banks and brokerages across Europe began a long weekend working to ensure a smooth transition to the euro.

Many describe the financial operation, involving translating trillions of dollars worth of stocks and bonds into euros, as the most complicated in history.

The fixing of the euro rates caused scarcely a ripple in thin holiday currency trade on Thursday where the euro was indicated to begin life valued at around $1.17.

The euro will bring dramatic changes in the way Europeans do business with each other and with the rest of the world. For the first time, travellers will be able to buygoods across Europe without the expense of changing money. Consumers will be able to compare prices in different countries, which is expected to narrow the wide price gaps existing now.

Businesses operating in th euro zone, which accounts for almost one fifth of world economic output and trade, will save on transaction costs and be able to plan with more certainty.

Critics of the single currency -- including many people in Britain, Denmark and Sweden, EU members which decided to stay out of monetary union for now -- fear loss of national sovereignty and a blurring of European countries' identities.

Greece, deemed economically unfit to join the euro now, on Thursday reconfirmed its desire to be ready in two years. Speaking in Brussels, German Economics Minister Werner Mueller said the single currency must be followed by more economic cooperation in Europe. His remarks looked set to revive fears in Britain over German calls for greater tax harmonisation in the EU.

"Countries which go it alone at thecost of other member-states endanger (the euro's) success. Unfair competition is in no-one's interest. That means for example the code of conduct on corporate taxes must be put into place effectively as soon as possible," Mueller said.

The euro is worth 1.95583 German marks, 6.55957 French francs, 1,936.27 Italian lire, 40.3399 Belgian or Luxembourg francs, 2.20371 Dutch guilders, 166.386 Spanish pesetas, 200.482 Portuguese escudos, 13.7603 Austrian schillings, 0.787564 Irish punts and 5.94573 Finnish markka.