Exactly 20 years ago, on 1st January 1999, 11 EU countries launched a common currency, the euro, and introduced a shared monetary policy under the European Central Bank.
Still young, the euro is already the currency of 340 million Europeans in 19 Member States. Seven more are currently waiting to enter the euro zone.
EU Institutions will mark the anniversary with an official celebration to be held on next 3rd January.
Second most importand currency in the world
The euro has come a long way from the first discussions in the late 1960s ttill today that it has become the currency of 340 million Europeans and used by a further 175 million worldwide.
The euro now is the second most important international currency, with around 60 countries in the world using it or linking their own currency to the euro in one way or another. It is a safe store of value for international central banks, used for issuing debt worldwide and widely accepted for international payments.
Loved by EU citizens, Euro Barometer says
A majority of 74% of respondents across the euro area said that they thought the euro was good for the EU; this is the same as the record high score set last year and confirms that popular support for the euro is at its highest since surveys began in 2002. A majority of 64% of respondents across the euro area also said that they thought the euro was good for their own country. 36% of Europeans identify the euro as one of the main symbols of the European Union, the second highest behind ‘freedom’ as a symbol.
The single currency in 19 EU Member States and 7 more under way
On 1 January 1999, the euro was launched, becoming the official currency of 11 Member States, with monetary policy responsibilities given to the European Central Bank and the Eurosystem. After three years of appearing on people’s bank statements alongside national currencies, euro banknotes and coins arrived in 12 countries, which thereby participated in the largest currency changeover in history.
The original members were Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Spain and Portugal. Greece joined in 2001. Since then, a further seven Member States have introduced the euro (Cyprus, Estonia, Latvia, Lithuania, Malta, Slovakia and Slovenia).
As soon as they meet the requirements needed to join the monetary union (the convergence criteria), more countries will join the euro zone.
Agreed in Maastricht by the EU Member States in 1991 as part of the preparations for introduction of the euro, the convergence criteria are formally defined as a set of macroeconomic indicators which measure: Price stability, to show inflation is controlled; Soundness and sustainability of public finances, through limits on government borrowing and national debt to avoid excessive deficit; Exchange-rate stability, through participation in the Exchange Rate Mechanism (ERM II) for at least two years without strong deviations from the ERM II central rate; and Long-term interest rates, to assess the durability of the convergence achieved by fulfilling the other criteria.
There are currently 9 EU Member States that do not participate in the euro area (Bulgaria, Croatia, the Czech Republic, Denmark, Hungary, Poland, Romania, Sweden and the United Kingdom). Denmark and the United Kingdom have negotiated opt-out arrangements and will therefore not be the subject of a convergence assessment until they request it. Further UK has been negotiating a deal to leave the EU in an orderly way.
Following the latest Convergence Rerport related to 2018, Bulgaria, The Czech Republic, Croatia Hungary, Poland, Romania and Sweden still do not meet all the convergence criteria needed to join the euro zone.
The launch of the euro marked the culmination of a long journey that had begun long before. The global monetary turmoil of the 1970s and 1980s had exposed individual European countries and called for European solutions. Moreover, with the establishment of a single market, it would be easier to work and trade if Europeans would start to use a single currency. After decades of early discussions on how an Economic and Monetary Union could be achieved, in 1988 the Delors Committee was set up. Under the chairmanship of then Commission President Jacques Delors, it examined specific, gradual steps towards such a single currency.
The agreement that political leaders subsequently signed in 1992 in Maastricht brought the single currency to life, building on the report of the Delors Committee and the ensuing negotiations. As such, the signing of the Maastricht Treaty became a symbolic moment in the move towards the euro. In 1994, the European Monetary Institute (EMI) started its preparatory work in Frankfurt for the European Central Bank (ECB) to assume its responsibility for monetary policy in the euro area. As a result, on 1 June 1998, the ECB became operational.
The euro provides tangible benefits to European households, businesses and governments, including: stable prices, lower transaction costs, protected savings, more transparent and competitive markets, and increased trade. That’s why there are plans to deepen the economic and monetary union (EMU). Despite there’s still a long way to run important advances have been achieved so far, as it is shownin the image included just below.
Tusk, Juncker, Tajani, Draghi and Centeno’s thoughts on the euro
The five Presidents of the EU institutions and bodies most directly responsible for the euro , the European Commission, the European Parliament, the European Council, the European Central Bank and the Eurogroup, commented on the 20 years of the single currency and on its future.
Donald Tusk, President of the European Council, said: “The creation of the euro 20 years ago, alongside the liberation of Central and Eastern Europe and the reunification of Germany, was a pivotal moment in European history. Our common currency has since matured into a powerful expression of the European Union as a political and economic force in the world. Despite crises, the euro has shown itself resilient, and the eight members which joined the original 11 have enjoyed its benefits. As the world keeps changing, we will keep upgrading and strengthening our Economic and Monetary Union.”
Jean-Claude Juncker, President of the European Commission, said: “As one of the only signatories of the Maastricht Treaty still politically active today, I remember the hard-fought and momentous negotiations on the launch of the Economic and Monetary Union. More than anything, I recall a deep conviction that we were opening a new chapter in our joint history. A chapter that would shape Europe’s role in the world and the future of all its people. 20 years on, I am convinced that this was the most important signature I ever made. The euro has become a symbol of unity, sovereignty and stability. It has delivered prosperity and protection to our citizens and we must ensure that it continues to do so. This is why we are working hard to complete our Economic and Monetary Union and boost the euro’s international role further.”
Antonio Tajani, President of the European Parliament, said: “The euro is more popular today than ever: three out of four citizens believe it is good for our economy. In order for Europeans to benefit fully from the jobs, growth and solidarity that the single currency should bring, we must complete our Economic and Monetary union through genuine financial, fiscal and political Union. This will also allow Europe to better shield its citizens from potential future crises.”
Mario Draghi, President of the European Central Bank, said: “The euro was a logical and necessary consequence of the single market. It makes it easier to travel, trade and transact within the euro area and beyond. After 20 years, there is now a generation who knows no other domestic currency. During that time, the ECB has delivered on its main task of maintaining price stability. But we also contribute to the well-being of euro area citizens by developing safe, innovative banknotes, promoting secure payment systems, supervising banks to ensure they are resilient and overseeing financial stability in the euro area.”
Mário Centeno, President of the Eurogroup, said: “The single currency has been one of the biggest European success stories: there can be no doubt about its importance and impact over the first two decades of its history. But its future is still being written, and that puts a historic responsibility on us. The euro and the close economic cooperation that it entails has evolved over time, overcoming challenges in its way. It has come a long way since the start, and it has seen important changes in the wake of the crisis to help us leave the hardship behind. But this work is not yet finished, it requires continuous reform efforts in good times as in bad times. There can be no doubts of our political will to strengthen the Economic and Monetary Union. We need to be prepared for what the future may hold, we owe that to our citizens.”
Image over the headline.- © European Union , 2018. Source: EC – Audiovisual Service. Photo: Mauro Bottaro