EC Takes Big Step Toward Common Currency : Commerce: Finance ministers of the 12 European nations approve a tentative agreement. It must win further approvals<i> ,</i> however.

European finance ministers Wednesday cleared away most of the obstacles to adopting a single currency to replace the German mark, the French franc and as many as 10 other national monies by the end of the decade.

Their agreement, which would give Great Britain and Denmark a chance to wriggle out, must still be approved at next week’s summit meeting of 12 European Community nations.

The deal could become unglued in horse-trading over other issues. Germany, for example, says it will not go along with a single currency unless its EC partners agree to work toward common foreign and security policies.

But Henning Christophersen, the EC’s commissioner for economic affairs, said: “It is now likely that at the latest on Jan. 1, 1999, we will have a single currency. . . . It is my impression that there are no insurmountable problems.”

The accord, reached in the early-morning hours after three arduous days of bargaining and years of study before that, marks a historic step toward blending Western Europe’s diverse economies into one.

In practice, the finance ministers hope that Germany’s tight management of the mark, which has helped hold inflation lower in Germany than in most European countries, will become the pattern for the whole EC.

The new currency would be called an ecu-- an acronym for European currency unit, but also the name given to a silver piece used in France and other parts of Europe in the 13th Century. A European Central Bank--already dubbed the EuroFed after the U.S. Federal Reserve Bank--would manage Europe’s money supply.

Many Europeans view a single currency as a necessary follow-on to the EC’s single-market program, launched in 1985. By the end of 1992, most national barriers to the movement of goods, services, money and people are to come down at the borders between the 12 EC nations.

Advocates of a single currency point to two major benefits: reducing the cost of changing one EC currency into another and, more important, reducing the risks of unfavorable currency fluctuations when businesses operate across national borders.

A tourist who left Paris with 1,000 francs and visited the other 11 EC countries, each time exchanging his money for the local currency but not spending any of it, would find himself with less than 500 francs when he returned from London.

Although electronic cash transfers by businesses are much cheaper, the EC Commission estimates that businesses in Europe spend $13 billion a year converting money from one EC currency to another.

Potential currency fluctuations are also widely thought to inhibit cross-border business. “The risk of currency fluctuations is still considered as a major obstacle to . . . trade in goods and movement of capital,” according to a recent EC study.

The benefits of a single currency would accrue to any business operating in Europe, including an American one. The American Chamber of Commerce has wholeheartedly endorsed a single currency.

The objections, voiced most vigorously by Great Britain, center on the belief that a single currency would deprive individual nations of an essential component of economic policy--control of their money supplies. Moreover, skeptics doubt that the same monetary policy would work for nations with low inflation (Germany) and small budget deficits (Luxembourg) as for nations with high inflation (Greece) and large deficits (Italy).