By Guto Harri BBC Political Correspondent

Llangollen is a tiny town in north Wales swamped every July by singers, dancers and performers from all over the world. Its festival is, above all else, a celebration of cultural diversity.

Wander the town or the eisteddfod site and you'll hear dozens of languages, see countless national costumes and witness a friendly display of national pride by visitors from 47 countries across the globe.

In the past, they carried with them their different currencies, and local banks sold pounds for a whole range of colourful notes and coins.

It is self-evident that the Euro is affecting Britain and we must offer support to businesses

Ruth Kelly, govt. Financial Secretary

Much of that diversity remains, but continental visitors this year will all be bringing Euros, and for the first time in the United Kingdom, they'll be able to use them - in shops, pubs, restaurants and around the eisteddfod field.

This seventh century site will therefore become part of the Euro-zone, or rather a British colony for the Euro empire across the channel.

Martyn Jones, the local Labour MP, dreamt up the idea and is delighted with the support he's secured.

The chamber of trade, tourism association, Denbighshire county council, High Street Banks and the eisteddfod organisers are all on board.

So too are some powerful political players.

Neil Kinnock, Vice President of the European Commission, has endorsed it warmly. "Fifty six years ago Llangollen led the World in establishing a fresh and creative way of strengthening understanding across borders with the International Eisteddfod.

"Obviously, the spirit of initiative is very much alive as Llangollen becomes part of the Eurozone for a week.

Around 47 countries take part attracting around 100,0000 people

"The result will be much greater convenience for visitors from 12 of our neighbouring countries and, for British people, the Euro will be shown to be a usable currency that holds no mysteries and carries no threats. Everyone gains from that."

The Europe Minister, Peter Hain, is similarly keen and even the Treasury, more cautious than any other department about sounding remotely enthusiastic about the Euro, have backed it warmly.

Ruth Kelly, the Financial Secretary, has described it as "an imaginative and innovative idea" and dared to reflect "it is self-evident that the Euro is affecting Britain and we must offer support to businesses in order to adequately adapt and deal with its impact. This proposal does just that."

Llangollen is unlikely to influence the Treasury's assessment of its infamous five tests, but Martin Jones hopes it will help tilt the political argument in favour of the Euro.

Llangollen sits close to Snowdonia National Park

"If we get people actually handling Euros in banks and shops, then I think it will be seen as less foreign and dangerous. It's the vanguard of something that should be done throughout Britain."

Two other towns are already considering following suit.

Bath believes a similar scheme could help its own international music festival, and Anglesey is eager to please tourists crossing it's border en route to and from Ireland by allowing them to use the Euro in the port town of Holyhead and elsewhere.

Britain in Europe, the pro-Euro organisation, points out that such initiatives could be a major help to the 13 million visitors who come to the UK form the continent every year.

Some local businesses are unhappy with the introduction of the zone.

Despite its huge popularity the festival is running at a loss

Stuart Davis has a Euro-till in his Gallery restaurant, and has been accepting different currencies there for long time.

But he complains that local people had not been properly consulted and is worried about the logistics of operating the zone.

Without Euro tills, calculating conversions would be a complicated, time consuming operation.

Expect some lively protests as well as competitions in Llangollen this week.