Starting Jan. 1, Europe will launch a daring financial experiment, with broad implications for U.S. investors and businesses. Eleven countries Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain will get a common currency. (Great Britain sidelined itself, for now.)

The new legal tender is called the euro. Initially, it will be used only by financial institutions and large companies, for transactions with each other. But in 2002, citizens will have to give up their francs, liras, deutsche marks and pesetas in favor of euro bills and coins.

Within this new Euroland an economy roughly the size of the United States’ most analysts expect huge changes to occur. Corporations are already merging, downsizing and spinning off unprofitable divisions. With a common currency, that impulse should speed up. Broader capital markets will encourage new entrepreneurial firms. Many prices should fall, as consumers abetted by mail-order firms comparison shop the continent.

On the downside, corporate restructuring will displace large numbers of workers and bury some traditional companies. That’s going to be resisted in a region that values safety nets and where unemployment is already running high.

For the euro to work, the countries in this new European Monetary Union (EMU) have to follow a common economic policy. But what happens if times turn bad and some governments disagree with EMU’s course? The continent would have an expensive mess on its hands if the common currency collapsed.

A few analysts doubt the euro will even amount to much. MIT economist Paul Krugman thinks that the story is overhyped. “Europe is already a free market,” he says. “Why would eliminating the slight transaction costs between currencies have more than a marginal impact on corporate strategy?”

Even so, the investment story in Europe seems pretty strong. Before July’s global stock market break, European-region mutual funds were up a blazing 35 percent since Jan. 1, compared with 23 percent for Standard & Poor’s 500-stock index. At the end of October, they were still ahead 11 percent for the year, compared with 13.3 percent for the S & P;, according to Lipper Analytical Services.

Stock prices may advance in Europe despite the slowdown in global economic growth. That’s because profits can rise in companies that restructure, even if their sales don’t.

“You could have 10 years of earnings growth, primarily due to cost-cutting,” says Diego Espinosa, who runs the Kemper Global Blue Chip Fund just as we had in the mid-1980s and early 1990s in the United States.

In America, restructuring has pretty much run its course. Profit growth depends more on economic growth a doubtful prospect at the moment. “I feel safer in European stocks,” Espinosa says.

Lawrence Kreicher, chief economist for Alliance Capital Management in New York, projects Euroland’s investment returns at 10 percent to 15 percent annually over the next five years far more than he expects from U.S. stocks.

The European stock story has another angle: the transition from an interest rate culture to an equity culture. In Europe, gentlemen prefer bonds. EMU’s stock markets are worth just $2.4 trillion, compared with $6.7 trillion in the U.S. even though Euroland generates about the same amount of world production and slightly more world trade.

But attitudes are changing. Low interest rates, combined with new retirement savings plans and aggressive mutual fund marketing, are luring more people into stocks. Demand could be huge, if the developing equity culture comes anywhere close to that in the United States.

Broader European bond markets will develop, too. Right now, most of Europe’s bonds are issued by governments. Corporations generally finance themselves through banks. But a single currency should consolidate Euroland’s pool of capital, making it easier for corporations to sell bonds themselves. Mutual fund groups will be peddling more European bond funds, including high-yield funds.

The headline-making switch to the euro is almost certainly going to run into back-end bumps.

“People are far too optimistic about the speed with which Europe will adapt,” says David Bowers, European investment strategist for Merrill Lynch in London, who foresees a difficult 12 to 18 months.

C. Randall Henning, of the Institute for International Economics in Washington, D.C., says the euro won’t succeed without policy reforms that reduce unemployment, lighten business and financial regulation, and privatize state industries.

Assuming the euro does indeed drive those reforms, the case is strong for keeping 15 percent to 20 percent of your equity there in a European fund or an international fund tilted toward Europe. For the past 15 years, American stocks have ruled the world. If eurostocks restructure, it will be their turn.

Patient advocates

Enough patients doubt their doctors and health plans today to create a new medical service: the independent advocate. Advocates stand on your side of the table. They advise on a wide range of issues, from the quality of your medical care to how to get an HMO to pay a bill.

I’m aware of three nationwide services, so far. Each has a different approach to dispensing advice.

? American Medical Consumers in La Crescenta, Calif. (800-836-5262) is aggressively pro-consumer. It helps you make health care decisions, resolve disputes and get better medical attention. It also explains your medical rights.

Founder Dr. Vincent Riccardi, an internist and clinical geneticist, takes the calls and dispenses advice. You pay $20 for a single session. A year’s worth of help, for any medical problem you have, costs $135.

? CareCounsel in San Rafael, Calif. (888-227-3334) signs up employers who want to offer medical advice to employees and their families. It has four contracts so far, and covers about 15,000 people, says Dr. Larry Gelb, a psychologist and president of the firm.

? Six-year-old Health Decisions International in Golden, Colo. (303-278-1700) works with both employers and health plans. Some 5 million people have access to HDI’s services, says the company’s chairman, internist Dr. Donald Vickery.

HDI is chiefly an information source, not an advocate. It tells you what’s known about the risks and benefits of the various treatments for a particular illness. That helps you make better medical decisions. HDI also offers advice on prenatal care, healthy lifestyles and managing chronic disease all at about 70 cents per member per month. But it doesn’t review medical records or handle coverage disputes. There, you’re on your own.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.