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Next month，the European Union's innermost circle may embark on a new expansion，if tiny Slovenia gets the go-ahead to join the euro，in January 2007.At the same time，an even smaller place，Lithuania，is likely to be rebuffed，and told firmly that it is not ready for the single currency.

Elsewhere the euro is making its mark in a rather different way.Were Italy not a member，there would surely have been a run on the lira by now，given the troubles facing Romano Prodi's would-be center-left coalition.And there actually has been a run on Iceland's currency—to the extent that some Icelanders have wondered whether they might perhaps be allowed to adopt the euro，please，to prevent further speculative attacks，even though Iceland is not a member of the EU.

In short，as it prepares to expand again，the euro seems to be working more or less as its founders intended.It has brought stability(oil prices of$75 a barrel have had little impact，even though Europe depends more on imported oil than does America).Countries are queuing up to join(all EU countries bar Britain and Denmark，which have specially negotiated opt-outs，are supposed to beCome members one day).And the tests of readiness to enter the euro remain as they were agreed at Maastricht in 1991:low inflation，budgetary austerity and exchange-rate stability(the so-called“convergence criteria”).

The reality is rather different.The euro is working，in that it is stable，has established itself as a currency and provides a monetary anchor.But it is not working as it was meant to.When it was dreamt up，the euro was supposed to bring about faster economic convergence.A single currency was the logical completion of the single market，it was said，and would encourage more integration.The end of exchange-rate risk would boost investment and bring economic cycles into line.The reduction in transaction costs would make economies more efficient，boosting growth.

Moreover，a single currency would，it was claimed，foster policy convergence.Because countries could no longer devalue，they would be forced to undergo the hard grind of reform.Since reform would push all countries in a similar direction，the euro would produce convergence.True believers went further，arguing that currency union would，ultimately，bring about political union.Indeed，for them，that was the point.But even short of this，a single currency would still pull economies together.As a result，the perils of a one-size-fits-all monetary policy would not be so worrisome:eventually，one size would，indeed，fit all.

Seven years on，there has been convergence of a kind.The euro area's long-term interest rates are broadly the same:they have converged on Germany's.Some countries，such as Ireland and Spain，have played economic catch-up(convergence in inCome and wealth)，though this may have little to do with the euro as such.Arguably，fiscal policy has converged too.That may sound odd when 13 of the 25 EU countries are being hauled over the coals for running“excessive”budget deficits.Yet euro governments have shown greater fiscal restraint that their peers in America or Britain in the past few years.

There has，however，been less convergence of economic performance.Ireland has grown by an average of 6％a year since 1999，Germany by barely 1％.Spain's growth has been twice Portugal's.As a recent paper^*from Bruegel，a think-tank in Brussels，points out，such divergence are no greater than among American states，but in America they usually result from states being at different points in the economic cycle；in Europe，growth differentials seem to be more persistent.There are few signs that economic cycles have beCome more closely aligned.

Even when countries have experienced similar pressures(loss of competitiveness，say)，they have reacted differently.Ireland and Italy have both lost competitiveness(by running above-average inflation).But Irish exports have boomed，whereas Italy's have stagnated.Germany and France have both gained competitiveness(having below-average inflation)，but French exports have been weak while Germany has regained its position as the world's biggest exporter of goods.

As a result，the risk of the euro's one-size-fits-all policy(that interest rates will be too loose for the hares，too tight for the tortoises)has been unpleasantly realized.And as for the broader ambitions for the euro，European countries have not noticeably converged upon economic reform，still less political union:witness the rejection of the draft EU constitution last year by French and Dutch voters.

The euro，in short，has provided currency stability but has done little to promote growth，jobs or reform.That is a long way from branding the currency a complete failure.But it is clear that what matters most is the“real”side of the economy(growth，jobs，markets)，not the nominal indicators of stability(inflation，budget deficits)that are used to decide both whether countries are ready to join，and how they are doing once they are in.

A key lesson is that flexible economies，such as Ireland's and Britain's，thrive，whether in or out of the euro.Inflexible ones can claw back lost competitiveness even inside the euro—but this takes a long time，and can Come at a high price because they must keep growth in unit labor costs below average for years.Germany has done this.Italy and Portugal now face the same challenge，but without the Germany tradition of belttightening.

For countries now anxious to join the single currency，however，economic considerations hardly matter.They wanted to join the EU to show they were normal countries and now want to join the euro to show they are good Europeans.But being a good European can Come at a cost—and it is not clear that all of the aspirants either understand this or are ready to pay.

1.What is the author's overall estimate of the euro?

2.What were the major benefits the founders of the euro expected?

3.What are the major problems with the euro mow?

4.Why does the euro fail to achieve its aims?

5.What do you think of the future of the euro?

Center-left coalition:Alliance between the left-wing parties and central parties in election campaign.

A run on Iceland's currency:Selling Iceland's currency for other currencies at a huge amount.

Budgetary austerity:To reduce government spending so as to reduce domestic demand and control inflation.

Monetary anchor:Money to provide support or protection against exchange-rate risks.

Bring economic cycles into line:To keep economic cycles in order.Economic cycle refers to the cycle of prosperity-stagnation-recessionrecovery.

Hauled over the coals:Literal meaning，be put on fire.Here it implies that the 13 countries are severely criticized for their excessive budget deficits.

Budget deficits:Budget deficits occur when government spending is higher than revenues.See background，the macroeconomic policy.

Think-tank:a committee of people experienced in a particular subject，established by an organization or government to develop ideas and give advice.

Too loose for the hares，too tight for the tortoises:A reference to the fable of the race between a hare and a tortoise.Here it means that the euro's policy may retrain those countries that have a higher growth rate and is unable to control those countries with a slow growth.

Macroeconomic policy:The macroeconomic policy refers to the policy developed by a government to regulate economic activities of a country.It includes two aspects:fiscal policy and monetary policy.

Fiscal policy:Fiscal policy means the policy of a government in developing its budget.A government's budget is made up of two parts: public expenditure and revenue.Public expenditure covers many areas，such as national security and defense，education，healthcare and environmental protection.Revenues Come from taxation.If public expenditure is higher than the revenue from taxation，the government is in budget deficit.Conversely，it is in budget surplus.Usually，the government will use the fiscal policy to regulate domestic economic activities.When inflation is high and economic development is overheated，thegovernmentwilladoptbudgetausterity—reduce government spending and raise taxes.This will reduce domestic consumption and curb expansion of production.

Monetary policy:Monetary policy is the policy adopted by the central bank to regulate a country's economic activities.It is made up of two parts:money supply and interest rate.If a country is high inflation and economic development is overheated，the central bank can reduce money supply，raise interest rate to discourage consumption and investment and encourage savings.Conversely，the central bank can increase money supply and lower down interest rate to encourage consumption and investment and discourage savings.

EU:European Union(EU)was founded in Sept.1st，1993 by 12 European countries on the Treaty of Maastricht(1992).Its aim was to form a unified Europe with common policies and laws.The idea of a unified Europe was first proposed by Winston Churchill，the ex-Prime Minister of Britain.The initial success of the European Coal and Steel Community(ECSC)inspired the founding of the EEC and finally led to the founding of EU.Since its founding，the EU has grown in size with successive waves of accessions.To ensure that the enlarged EU can continue functioning efficiently，it needs a more streamlined system for taking decisions.That is why the Treaty of Nice lays down new rules governing the size of the EU institutions and the way they work.It Come into force on 1 February 2003.It will be replaced，in 2006，by the new EU Constitution—if all EU countries approve this.

Euro:In 1992 the EU decided to go for economic and monetary union(EMU)，involving the introduction of a single European currency managed by a European Central Bank.The single currency—the euro—beCome a reality on 1 January 2002，when euro notes and coins replaced national currencies in twelve of the 15 countries of the European Union(Belgium，Germany，Greece，Spain，France，Ireland，Italy，Luxembourg，the Netherlands，Austria，Portugal and Finland).

英语新闻标题中虚实词的去留:简洁的标题是新闻不可分割的组成部分。英语新闻标题有一套可称为“标题语言”独特体系。标题为新闻之眼，能让读者在短时间内一目了然，去繁化简、去虚留实，这已成为标题的一大特色。从虚实词看，标题中虚词的省略是标题创作通则之一。一般而言，标题中虚词省略现象主要体现在冠词、系动词和助动词三个方面:

●冠词基本省略。如:China to Acquire Overseas Stake for Second Time.China Is to Acquire Overseas Stake for the Second Time.中国再次在海外购买股份。

●系动词通常省略。如:Three Dead after Inhaling Oven Gas.Three Are Dead after Inhaling Oven Gas.吸入炉灶煤气三人窒息身亡。

●助动词通常省略。如:India Mending Fences.India Is Mending Fences.印度正在改善与邻国的关系。

Ⅰ.According to the article，determine which statements are true and which are false.

1.According to the author，the euro is performing quite successful as many countries apply to join it.

2.According to the author，the euro is not achieving its aims of

3.The author implies that the single policy of the euro works well with countries that have higher growth rate，but not with countries of slower growth.

4.The author asks the countries that apply to join the euro to be cautious，as they may have to pay a high price to beCome a member.

5.The author questions the concept of the euro in the article.

1.Why is Lithuania rebuffed for its application to join the euro?

A.It is too small.

B.It is a state of the ex-Soviet Union.

C.It does not meet the criteria of the euro.

D.It is not a member of the European Union.

2.What are the criteria to beCome a member country of the euro?

A.Inflation must be low.

B.A tight control of budget deficits and measures to reduce them.

C.The exchange rate of the currency should be stable over time.

D.All of the above.

3.What benefits does the euro offer to its member countries?

A.To boost economic development of the member countries.

B.To reduce transaction costs and maintain a stable exchange rate.

C.To coordinate economic development of the member countries.

D.To foster cooperation and mutual assistance among the member countries.

4.What are the problems of the euro?

A.It fails to stimulate economic growth of the member countries.

B.It is unable to control high inflation of the member countries.

C.It is unable to reduce the budget deficits of the member countries.

D.Its exchange rate is not stable over time.

5.What has caused the difference among the countries in the euro system?

A.Alignment with the single policy of the euro.

B.Flexible economic policy of the member countries.

C.The rate of inflation and budget deficits of the member countries.

D.The rate of unit labor costs and domestic consumption.