Euro marks 20 eventful years
- The euro was introduced in 12 European countries in notes and coins in 2002
- Today, the euro is the official currency for 340 million people in 19 EU countries
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.
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 euro zone in the next few years – though people are divided over the benefits of abandoning their national currencies.
The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade more simple between member nations and give the continent a currency to compete with the mighty dollar.
Officials credit the euro for helping Europe avoid an economic catastrophe during the coronavirus pandemic.
“Clearly, Europe and the euro have become inseparable,” European Central Bank chief Christine Lagarde wrote in a blog post.
“And for young Europeans, who have only ever known the single currency, it must be almost impossible to imagine Europe without it,” she wrote.
In the euro’s initial days, consumers were concerned that its emergence had caused prices to rise as countries had to convert 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.
The price of a baguette in France, for example, rose from 66 cents in 2001 to 90 cents today – an increase in line with pre-euro inflation.
More expensive goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.
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 per cent of global foreign exchange reserves compared to 60 per cent for the US greenback.
The euro zone remained strong after facing 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.
“It is fair to say that the euro has had an eventful first two decades,” members of the Eurogroup of finance ministers said in a joint article.
The Eurogroup learned “valuable lessons” that enabled it to respond to the pandemic swiftly, decisively and in a coordinated manner, they said.
During the Covid crisis, countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low and drive economic growth.
“The euro has strengthened its foundations over the last 20 years Irish Finance Minister Paschal Donohoe, who heads the Eurogroup, said in a video message.
“It’s proven its mettle in dealing with great challenges and great crises.”