The euro marks 20 turbulent years

The euro marks 20 years since people started using the single European currency on Saturday, overcoming initial doubts, pricing concerns and a debt crisis that has spread across the region.

Euro banknotes and coins entered circulation in 12 countries on January 1, 2002, greeted by a mixture of enthusiasm and skepticism from citizens who had to exchange their Deutsche Marks, French Francs, Pesetas and lire.

The euro is now used by 340 million people in 19 countries, from Ireland to Germany to Slovakia.

Bulgaria, Croatia and Romania are next to join the eurozone in the next few years, although 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, simplify trade between member countries and give the continent a currency to compete with the mighty dollar. .

Officials give the euro credit for helping Europe avoid economic disaster during the coronavirus pandemic.

“Obviously, Europe and the euro have become inseparable,” wrote Christine Lagarde, director of the European Central Bank, 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 writes.

At the start of the euro, consumers feared that its emergence would cause prices to rise as countries had to convert to the new currency.

Although some commodities – such as coffee in cafes – edged up slightly as companies rounded up their conversions, official statistics showed that the euro brought more stable inflation.

The price of a baguette in France, for example, has gone from 66 cents in 2001 to 90 cents today, an increase in line with pre-euro inflation.

The prices of more expensive products have not increased and have even fallen 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 that no country was portrayed against the others.

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

“After 20 years, it is time to rethink the appearance of our banknotes to make them more accessible to Europeans of all ages and from all walks of life,” said Lagarde.

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

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

– “Proved his courage” –

The eurozone has remained strong after facing an existential threat a decade ago when it was rocked by a debt crisis that started in Greece and spread to other countries.

Greece, Ireland, Portugal, Spain and Cyprus were saved thanks to bailouts in exchange for austerity measures, and the euro came out of the abyss.

“It is fair to say that the euro has had a turbulent first decade,” members of the Eurogroup of finance ministers said in a joint article.

The Eurogroup drew “valuable lessons” which enabled it to respond to the pandemic in a rapid, decisive and coordinated manner, they said.

During the Covid crisis, countries rolled out huge stimulus packages while the ECB rolled out a massive bond buying program to keep borrowing costs low and boost economic growth.

“The euro has strengthened its foundations over the past 20 years,” Irish Finance Minister Paschal Donohoe, who heads the Eurogroup, said in a video message.

“He has proven himself to face big challenges and big crises.”

cha-bur / ico / lth / pvh

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