Q: Will the European Community adopt a common currency?

A: Huh? It already has. It's called the Euro.

Q: Will a Common European Currency adversely affect the dollar as the world reserve currency?

A: It can't "adversly affect the dollar as the world reserve currency"... only the US dollar can do that to itself, in which case international buyers *might* choose the Euro as it's default international currency.

A lot of people - especially Americans - forget that the US dollar didn't become the default international currency until the 1950's.

Prior to that, it was the British pound, and global buyers and sellers were very tenatious about hanging onto it as their default currency, long after the British Empire had show clear signs of disolving.

But... there came a point, what with the US becoming the major force behind NATO combined with the way it made a business out of going all over the world making deals with countries to set up bases, combined with Britian taking a back seat to NATO, that people just shrugged and decided to switch to the US greenback as their default international currency.

IF the US continues to botch management of internal finance by letting speculators do things to it like nearly collapsed the US economy a year ago, then yeah... maybe international buyers and sellers will choose to mediate in the Euro... or maybe the Japanese ten-yen note... or maybe the Chinese raminbi...

There's plenty of evidence that the world would have started switching to something else already - so serious was the near collapse of the US economic system a year ago - but China is keeping it propped up, because China was buying billions of dollars of US T-bills per month through the 90's, such that if the US dollar collapsed, then she, China, would loose trillions from bad investments in US T-bills, and can't afford to have the US dollar collapse nor have it go away as the default currency for international trade.

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