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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

Member comments

  1. The Euro’s a fairweather currency. As each national economy now diverges – with inflation now rampant in Spain and Lithuania at over 7% – it will be interesting to see how something as inelastic as the Euro copes. Wage freezes are now operating in Belgium and other countries to try and stop wage inflation taking off whilst the opposite will be happening in France and Germany. In theory , the Euro shouldn’t work. In practice we’ll know this year. John Major only ever had one good idea as PM and that was to make the Euro a common currency rather than a single currency.

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EUROPEAN UNION

Macron: ‘2022 must be a turning point for Europe’

French President Emmanuel Macron said on Friday that 2022 should be a "turning point" for the European Union, in an national address just four months from elections.

Macron: '2022 must be a turning point for Europe'
French President Emmanuel Macron makes his speech on New Year's Eve. Photo: Martin Bureau/AFP

The pro-EU 44-year-old, who is a narrow favourite for re-election in April, hailed the EU’s role in securing vaccines against Covid-19 for the continent and in providing funds for national stimulus plans which are set to be rolled out in 2022.

“The year 2022 must be a turning point for Europe,” he said in a 13-minute speech recorded in the garden of the Elysee presidential palace. “Our continent has been decried so much in recent years. They say it’s divided, incapable of collective projects, in the process of becoming a historical irrelevance.”

The Covid-19 crisis “has demonstrated that our Europe can be not only useful but also a source of hope,” he said.

France is set to take over the rotating presidency of the EU on January 1, something observers expect the Macron to use for his own re-election campaign.

“You can count on my complete commitment to ensure that this period, which comes around every 13 years, is a time of progress for you,” Macron said, before listing his top priorities as border control, European defence, climate change and gender equality.

To mark the start of the six-month EU presidency, historic buildings across the country were illuminated in the blue of the EU flag on New Year’s Eve, including the Elysée Palace and the Eiffel Tower.

On the Covid-19 crisis in France, which has seen the country record more than 200,000 daily infections this week, Macron said that “there will be difficult weeks ahead” but that 2022 would “perhaps be the year we leave the pandemic behind.”

Thanks to France’s high vaccination rate, “we can overcome this wave”, he said.

The government cancelled its traditional New Year’s Eve fireworks show in Paris, while nightclubs have been closed nation-wide and dancing has been banned in bars. Mandatory mask-wearing outside has also returned in major cities such as Paris, but there are no curfews or restrictions on gatherings at homes.

Turning to the April election, Macron ended with a call for the country to remain “united” and to “continue to respect our differences” in veiled criticism of his far-right nationalist opponents Marine Le Pen and Eric Zemmour who he sees as fomenting divisions.

“Stay united, benevolent and together,” he urged, before ending with “Long live our Europe, the republic and France.”

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