By JAMES L. GRAFF, PETER HAWTHORNE AND RICHARD HORNIK

BANKING ON SOUTH AFRICA'S FUTURE

With financial markets aflutter and the rand in free-fall, it was hardly the best time last week for the South African government to announce that a well-connected African National Congress politician would succeed Chris Stals, the conservative Afrikaner, as governor of the Reserve Bank. Or maybe it was. Part of the pressure on the rand resulted from speculation that Stals, whose term of office expires in a year, was to be prematurely retired, or even dismissed, for his handling of the rand crisis. Stepping in to stop the rumors, Deputy President Thabo Mbeki announced that Minister of Labor Tito Mboweni, 39, would become Stals' "special assistant" for a year before taking over.

After the initial shock at an apparent threat to the independence of the central bank, local reaction turned to cautious optimism. Over the past four years, Mboweni has helped produce a complicated package of economic reform initiatives and achieved notable compromises between labor and business. To reassure the markets, he quickly pledged independence for the Reserve Bank and that he had no surprises in store. "Mboweni has the right stuff," said an editorial in South Africa's national Sunday Independent. Currency traders may give him the benefit of the doubt for a while. The rand finished last Friday slightly stronger than it had begun the week, but it is not out of the woods yet.

EURO HASTE MAKES MONETARY WASTE

The French government takes a backseat to no one in its enthusiasm for the inauguration of the euro. Finance Minister Dominique Strauss-Kahn has even called for the shortening of the planned six-month transition period in 2002, when Europe's new single currency and its national precursors will circulate together. Strauss-Kahn also took great pride in the fact that France was the first country to begin minting its share of the 70 billion euro coins which will be needed. Unfortunately, France's head start has come a cropper. Turns out the European Union got the specifications wrong. Organizations representing blind people in Europe complained that the 10- and 50- euro cent coins were indistinguishable for their members. Vending machine companies added their own 2 cents' worth of criticism by noting that because the 20- and 50-cent coins weigh roughly the same, their machines could not tell them apart. The solution for blind consumers will be to use different raised ridges around the rims, as originally agreed by the E.U. The vending machine problem requires a redesign. The bottom line: France must melt down roughly 9 million freshly minted euro coins and restrike them at a total cost of over $300,000. In fact, the bill would have been even higher had workers at the mint in Pessac not gone on strike for two weeks. Enthusiasm can be expensive.

BRUSSELS CLEARS BA/AA FORTAKEOFF

The fog may finally be clearing in the long-running confusion over airline alliances in Europe. For months, major carriers on both sides of the Atlantic have been circling Brussels waiting for permission to join forces for the coming global battle for superiority in commercial aviation. The European Union gave its blessing to two such linkups last week, but demanded substantial concessions in return. British Airways and American Airlines must relinquish up to 267 of their weekly landing and takeoff slots at Heathrow and Gatwick airports to give possible competitors a better shot at the lucrative trans-Atlantic market. For the same reason, they also have to reduce the frequency of "hub-to-hub" flights between London and Chicago, Miami and Dallas for six months. Competition Commissioner Karel van Miert demanded similar rollbacks for the existing alliance of Lufthansa, SAS and United Airlines, which will have to give up 108 slots in Frankfurt and Copenhagen and cut back flights from Frankfurt to Chicago and to Washington. Van Miert isn't finished: he is still vetting two other alliances linking Northwest with KLM and Delta with Sabena, Swissair and Austrian. And he said he was "still looking for remedies" for the competitive advantage alliances enjoy via frequent flyer programs and their domination of computer reservation systems.