Common currency rises to 25: What you need to know about the quarter-century-old euro

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350 million people, 20 countries, one currency; The euro unites Europe. In May, EU Commission President Ursula von der Leyen enthused that the common currency was “much more than cash in our pockets.” “The euro is a symbol of our common ideals and the stability that is very important to us.”

But at the same time, skepticism about the euro, which was criticized as “expensive” especially in its early years, has not completely disappeared even 25 years after its launch on January 1, 1999. Considering the recent rapid price increases, some Germans are nostalgic for the good old days of D-Mark.

In many countries, right-wing populists are increasing sentiment against the euro and calling for a return to national currencies. One problem: Although monetary policy was concentrated in the European Central Bank, economic and budget policy remained largely under national sovereignty.

Criticism at the launch of the euro

Even the introduction of the common European currency was not an unequivocal success, as Otmar Issing, then chief economist of the ECB, founded in 1998, later recalled: “The euro was viewed with great suspicion at the time. ”

By his own admission, Issing himself had doubts about whether Europeans were ready for uniform currency in the late 1990s. “I thought starting with so many countries in 1999 would be a risky venture,” he later said.

For 11 of the then 15 member states of the European Union (EU), the euro became legal tender on 1 January 1999; initially electronically, then in cash from 2002. Belgium, Germany, Finland, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal and Spain were there from the beginning.

The majority think the euro is a good thing

In the EU Commission’s latest “Eurobarometer”, 79 percent of people aged 15 and over surveyed in October 2023 said that, in their opinion, the euro is a good thing for the EU.

Euro supporters are in the majority in all 20 euro countries: support for the single currency is currently strongest in Slovakia, where 90 percent of those surveyed think the euro is good. The lowest approval levels are seen in Latvia (70 percent), Cyprus and Italy (both 72 percent). In the survey, Germany provided 80 percent support for the euro; This represents an increase of 6 percentage points compared to the previous year.

From the perspective of supporters, the advantages of the common currency are clear: Anyone traveling in the eurozone no longer has to exchange money and pay fees. It’s easier to shop or compare prices abroad. Competition for customers across national borders can lead to cheaper prices for products. Companies save money because the costs of currency exchange and hedging against exchange rate fluctuations are eliminated.

The call of “expensive” echoes

The European Central Bank opposes the fact that the euro has never fully gotten rid of its reputation as an expensive euro, with the stability of the common currency: “If I look at the last 25 years with all its ups and downs, on average, European Central Bank President Christine Lagarde said in an interview with “tagesschau.de” in May. ​​he said: “The inflation rate of 2.05 percent was quite remarkable.

For comparison: In D-Mark’s 50 years, the inflation rate in Germany averaged 2.8 percent. The ECB aims for price stability in the medium term with an annual inflation rate of 2 percent in the currency area. (SDA/uro)

Source :Blick