The Treaty of Rome never said there would be a single currency. Yet, for many historians of European integration, the genesis lay there in the simple formula that member-states should regard their economic policies as a matter of common concern.

For many, the iron logic of the common market meant that it was only a matter of time. The costs of changing money apart, exchange rate uncertainty and the possibility of currency movements being used as protectionist barriers would inevitably lead to demands to lock currencies together.

And the creation of the huge Common Agricultural Policy, with its common prices and grants to farmers, also begged the question.

But the single currency was always as much a political project as an economic one, driven by the determination of Germany and France, above all, to cement the integration of Europe. In the end its realisation was the product of one of the most important political trade-offs in the post-Cold War era - EU support for German reunification in exchange for the Europeanisation of the Bundesbank. Political will, the logic of globalisation, and the 1980s boom that made convergence of Europe's economies a real prospect all made possible the project whose earlier manifestation had been simply too early and too ambitious.

The date of conception of the euro can be fixed precisely. At the Hague summit of 1969 the leaders of the six Common Market countries agreed to prepare the ground for an economic and monetary union based on an action plan devised by Pierre Werner, then Finance and Prime Minister of Luxembourg. The discussion led to the establishment the next year of the Werner Committee whose task was to reconcile the conflicting approaches of French and German ministers.

The committee reported in February 1971, urging the integration of the EEC into a single economy in three stages.

The key elements would be the eventual fixing of exchange rates (but not a single currency), a single monetary authority and policy, unified capital markets, centralisation of fiscal policy at Community level, a strengthening of regional and structural policies and closer social partnership.

This radical but ill-fated programme was endorsed by the Paris summit of October 1972 with the aim of completing the transition to monetary union by 1980.

The first step taken by the six was the establishment of the "snake in the tunnel", a mechanism which allowed currencies to fluctuate within a band of plus or minus 2.25 per cent. This band would itself then be able to move with relation to the dollar. The six were quickly joined by Britain, Ireland, Denmark and Norway. The system ran into difficulties with sterling - to which the pound was then tied - forced out, followed by the lira and the franc. By 1978 only the mark and a few core currencies remained and the whole experiment fell apart.

The next attempt at monetary co-ordination was the result of an appeal by the then Commission President, Sir Roy Jenkins, in 1977 when France's President Valery Giscard D'Estaing and Germany's Chancellor Helmut Schmidt proposed a stabilisation system that would end up as the European Monetary System (EMS).

The aim was limited to "a zone of monetary stability" rather than monetary union, but the big project would not die. In 1986 it acquired a special place in the Single European Act - a pledge to launch a single currency as part of the completion of the internal market.

The EMS was launched in 1979 and, despite the 1992-93 crisis - which nearly brought it down - has proved more durable than its predecessor. The system was based on a multilateral parity grid, the exchange rate mechanism (ERM), in which currencies were allowed to fluctuated 2.25 per cent above and below a central rate. The variation was later expanded to plus or minus 6 per cent.

In the first few years there were frequent realignments of the system, usually involving a revaluation of the stronger currencies, but gradually member states began to evolve anti-inflationary monetary strategies aimed at emulating the mark.

By 1988, having made a renewed commitment to complete the single market, the French and Germans were willing to have another go at monetary union. At the Hanover summit that year a committee under the dynamic President of the Commission, Jacques Delors, was appointed to look at the prospects. In June, 1989, the Madrid summit accepted its three-phase approach.

Behind the scenes one of the most remarkable and significant historic compromises had been brokered between Germany's Chancellor Helmut Kohl and France's President Francois Mitterrand. In exchange for French and European support for German unification, Germany would agree to relinquish its cherished Bundesbank and deutschmark and lock itself into a common currency.

Delors squared it with the sceptical central bankers, promising them a degree of autonomy from politicians that made the Bundesbank look tame. Madrid agreed that Stage One, essentially the completion of the single market, with the creation of a single financial market in which there was free movement of capital and services would be launched in July 1990, and an Inter-Governmental Conference on EMU would be convened as soon as possible. Stage Two would see a transition towards locked exchange rates, closer economic co-ordination, and the establishment of an embryonic, independent European Central Bank (ECB). Stage Three would see the beginning of monetary union proper with the irrevocable locking of exchange rates.

Following a year of intensive talks the package was wrapped up in a new treaty at Maastricht in December 1991. But the politicians were ahead of the people. The fraught ratification process would take two years. Denmark, despite its single currency opt-out shared with Britain, would initially reject, then accept. France accepted by the tiniest majority. In Germany major concerns about the fate of its most precious institution, the Bundesbank, would lead to delays.

The treaty provided for explicit convergence criteria by which member states' fitness for participation would be judged and set a provisional date of January 1st, 1998, as the target launch for Stage Three. However, problems lay ahead.

A fiscal tightening in Germany following unification, an overvalued sterling, and a weakening of the US dollar, led to the monetary crisis of 1992-93.

The result was devaluation of the Irish, Portuguese, and Spanish currencies and the spectacular departure in September 1992 from the ERM of sterling and the lira. In a bid to prevent the collapse of the ERM, ministers agreed to widen the fluctuation bands to plus or minus 15 per cent, effectively abandoning the ERM as a meaningful currency mechanism.

By 1995 it had become clear that sufficient member-states would not be ready by then and the launch was put back to the fall-back date of January 1999.

Yet the widening of the bands did calm the markets and member states reiterated their commitment to convergence. Despite another bout of monetary jitters in 1995, the train remained on its tracks and the four years to 1997 saw a remarkable period of budget consolidation and price stabilisation in the now 15 member states. Momentum had been restored.

The mechanism under which member state public finances would be controlled was finally agreed in Dublin in December 1996 in the form of the stability pact. In Madrid a year later the currency got its name.

The challenge now was to see how many countries would meet the criteria. There had been intense media speculation in the face of the slowdown in 1995 that what was seen as the key index, the 3 per cent budget deficit figure, would be fudged.

In Germany there were openly expressed fears that the lira's participation would jeopardise the credibility of the euro. France said it could not go ahead without Italy, while Rome insisted on membership.

The political drive that had given the whole project its impetus was now seen by the sceptics as the fatal flaw that would lead to the dilution of the currency's strength from the start. But even Italy did it. Eleven countries met the criteria on inflation, exchange rates, interest rates and the deficit. Only the debt criterion was fudged to allow both Italy and Belgium to participate. Britain and Denmark used their Maastricht opt-outs, Sweden bent the rules to exercise one too. Greece's time would come. No-one complained.

Then, with only months to go, it was just a question of tying up loose ends. Over a long May Day summit the rates at which the currencies would be locked were pre-agreed with little fuss, to be followed by a mother of all rows about who would preside over the ECB. Despite French bluster the Dutch central banker, Wim Duisenberg, won the day and will on January 1st steer the EU into a new era.