According to the Frankfurt-based European Central Bank (ECB), the euro recently surpassed the dollar in terms of the amount of bills in circulation worldwide.

During the Christmas holidays, the ECB reported a record number of 628 billion euros in banknotes in circulation. That compares with $760 billion (585 billion euros).

"For the first time the Euro overtook the dollar related to value," a European Central Bank spokesman told the Süddeutsche Zeitung.

"Teuro" instead of euro?

Despite the euro's new-found muscle as it nears its fifth anniversary on Jan 1, many Europeans from the 12-member eurozone remain deeply skeptical about their common currency.

Seen as an important step toward deeper European integration, the vast initiative was sold to citizens on its economic merits, promising higher growth and protection from the currency crises that had regularly hit the continent.

But public support for the single currency has fallen since its launch in cash form on January 1, 2002, when 304 million Europeans swapped their national currencies for a common means of exchange.

Many feel that since its introduction in 2002, coffee, beer, gasoline and many other basics have become more expensive. In Germany, the currency was quickly nicknamed the "teuro," a play on the German word "teuer" which means expensive.

It's a regular gripe in Germany, for example, that café owners have simply substituted deutschemark prices for euros, effectively doubling the cost of a coffee or beer.

The belief can have serious economic consequences. Sluggish consumer spending can put brakes on a country's overall economic performance, as happened in Germany for many years.

Swiss economist Hans Wolfgang Brachinger developed a special price index of perceived inflation. In the past decade, the average perceived inflation in Germany was "approximately four times higher than the official inflation rate," the AFP news service reported.

Perception is everything

"If the German economy has any interest in sustainably reviving consumption, it should work towards significantly lowering the perception of inflation among consumers," Brachinger said.

Brachinger's methods and conclusions have been fiercely contested by Bundesbank economists. But there's no denying that a gap between real and felt inflation exists.

Just before the changeover to the Euro, fruits, vegetables and petrol increased substantially in price. Consumers wrongly blamed the Euro, Cologne-based market research group IFAV has suggested. That caused prices in cafes and restaurants to increase, further fueling the belief that the euro was to blame for higher goods.

The European Central Bank has tried to rebut claims of
higher prices and the Frankfurt-based institution points to the
stable level of inflation, which has remained at slightly more than
2.0 percent over the period. The bank has been at pains to stress that increases in the costs of energy and real estate are not connected to the euro and that prices for some goods have actually fallen, in the high-tech sector for example.

However the European Central Bank has recently become a target for criticism itself, particularly from French politicians, amid a
debate about the strength of the euro against the dollar and the
yen.

Euro falters on the political front

On the political front, the euro was once seen as being a
catalyst for deeper integration, but the process of bringing member
states into a closer political union has foundered in recent times.

Although the European Union has expanded since its introduction,
welcoming 10 new members in 2004, the rejection of the European Constitution by French and Dutch voters in 2005 was a setback for the EU project.

There are also signs that the allure of the euro has fallen for
candidate countries.

Slovenia is set to become the 13th member of the eurozone on
January 1, but other new EU members are now showing less enthusiasm than before for jettisoning their national currencies.