Thursday, August 5, 2021

Happy 15th birthday, Euro: key things to know


The euro, used by nearly 340 million people each day, celebrates its 15th birthday on Sunday.

Like a teenager in the throes of adolescence, the euro has lurched from crisis to crisis in recent years, but still manages to enjoy firm support across the 19-member area — especially among a new generation who have never known any other currency.

Here is a snapshot of some key points and memorable moments in the life of the euro:

Birth of a currency

The euro was launched on January 1, 1999, initially existing only as a virtual currency used in accounting and financial transactions.

Euro coins and notes were introduced on January 1, 2002.

The inspiration for the euro symbol came from the Greek letter epsilon, a nod to the country’s history as the cradle of European civilisation. The two parallel strokes across the logo signify stability.

Euro coins each have a side bearing a national design. Austria for example opted for Mozart, Ireland for the Celtic harp.

Euro banknotes on the other hand never depict people or real places, only illustrations of fictional architecture.

Growing pains

The euro’s arrival wasn’t love at first sight, with many citizens perceiving the switchover as an unwelcome price hike.

In Germany, the currency was nicknamed the “teuro”, a pun on the word “teuer” (expensive) and euro.

But attitudes softened over time, won over by the ease of travelling and doing business across borders without having to worry about foreign exchange fluctuations.

Today, 56 percent of people think having the euro is “a good thing” for their country, according to a European Commission survey of some 17,500 euro area citizens published this month.

Among those aged 15-24, support for the euro stands even higher at 68 percent.

“The average citizen sees the euro as a source of political stability but also a source of low inflation,” says Maria Demertzis, deputy director at the Bruegel think tank, adding that this has been a particularly welcome development in countries that historically saw more volatility.

Goodbye note

The European Central Bank this year said it plans to stop issuing the 500-euro note, the currency’s largest denomination bill, by late 2018.

The purple-coloured banknote is believed to be favoured by criminals for money laundering and even terrorist financing.

But resistance to its abolition runs high in Germany, where people still prefer to pay in cash and fear that getting rid of the 500-euro bill is simply the first step towards scrapping notes and coins altogether.

 On the brink

The eurozone has suffered two major crises that almost led to the break-up of the monetary union.

The trouble began in Greece when, in the aftermath of the 2008 global financial crisis, access to easy credit dried up and the country threatened to default on its massive debt.

Concerns soon spread to other heavily indebted European Union member states such as Portugal and Ireland, culminating in several international bailouts that proved a major test of European solidarity.

But Greece’s woes did not end there. Even after receiving two rescue packages, its economic situation deteriorated and it came dangerously close to a humiliating exit from the euro in 2015, until eurozone leaders again agreed to save Athens with a third bailout.

“Greece is and will irreversibly remain a member of the euro area,” European Commission chief Jean-Claude Juncker said at the time.

Eurosceptics on the rise

With elections looming in the Netherlands, France, Germany and Italy, eurozone leaders are nervously eyeing the rise of populist, eurosceptic parties emboldened by Britain’s shock decision to quit the EU this year.

French far-right leader Marine Le Pen has promised to pull her country out of the euro and organise a referendum on EU membership if she wins the race for the presidency.

“Economically I think we have less to worry about because the eurozone is picking up again,” Demertzis told AFP. “But the political uncertainty is the one to watch.”

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