The Short History And Large Impact Of The Euro
Posted by Allison on 6 April 2009, 15:00
Three hundred and twenty million people throughout Europe use the Euro as their currency, with still more yet to adopt it in the future. A single currency throughout Europe has been tried in the past, but it only became a reality back in 2002, when the coins and notes that many countries now use came into circulation.
Getting rid of national currencies and bringing in a completely new one was a bold move, so it was small wonder that opinion was divided on whether this was a good or a bad idea for Europe as a whole.
Some countries were happy to adopt the new currency – although it was claimed that only those that would benefit from it were eager to take it on. The countries which form Europe are many and varied, making it difficult to unite them in a way which is beneficial to everyone.
The UK, Denmark and Sweden didn't opt in when the currency became legal tender originally, but they may do so when referendums are called in the future. It could be argued that the UK is the most resistant to joining, for two main reasons. Firstly they have used their own currency, pounds sterling, for some nine centuries – a lot longer than many other European countries. That's a long history to want to discard overnight. Secondly they are dubious as to whether giving up autonomy in general and passing it over to another country would be the best way to keep control of how their own country is ruled.
The currency consists of eight main coins (of which two are hardly used, despite the currency only being a few years old) and seven banknotes. Of these banknotes, the four lowest denominations are the most commonly seen in circulation.
One fact that isn't commonly known among those who don't use the Euro is that while each member country uses the same coins and notes, each country has a different design on the back of its coins. This usually indicates an image or person which relates to the country those particular Euro coins are used in. They are still legal tender in every country which accepts the Euro however.
While the current history of the Euro only goes back to the 1950s, there have been other attempts at creating a single European currency throughout history. The most recent failed attempt was halted by the start of the First World War, but it had managed to hold firm for some fifty years before its collapse – quite an impressive reign.
But the original forerunner to the current Euro currency was created during the Roman Empire, which used a common currency as well as several smaller and more insignificant ones. So while the people who are behind the Euro of the 21st century may congratulate themselves on their achievements, in reality they have been building on the work already laid down by others centuries before them.
It's obvious that the Europeans have been profoundly affected by the Euro, but they are not the only ones to feel its presence. The dollar has been a huge presence in the world for a long time, but this is the first time in decades that there has been a currency strong enough to even entertain the possibility of toppling the mighty dollar from its position. As it is there is more Euro currency in circulation in the form of notes and coins than there are dollars and cents. Even a few years ago – when the idea of the Euro was still in the early stages - it would have been unheard of.
While the decision on whether or not to join the Euro seems to be a simple yes or no answer, in reality there are plenty of circumstances which need to be considered for the decision to be made. Contrary to what some people may think, the decision is never made lightly and a number of factors need to be looked at before a country is accepted into the Euro.
In this sense it's actually possible for a country to request membership and be refused – which is what happened when Lithuania wanted to join at the beginning of 2007. The economic stability in that country was deemed to be unsuitable for joining, and so it was postponed until it could meet the conditions laid down for doing so.
The key advantage of a single European currency is the fact that there is no longer any need to change currencies when going on holiday, or working out exchange rates for any reason. But that advantage – the fact that it unifies many European countries – is also what puts other countries off from joining.
Many people argue that it is virtually impossible to unite so many countries with a common currency. Every country has different ways of living, different sectors of business that work well for them, and many other traits that make it difficult to unite all the European countries, as is the ideal final vision for the Euro.
The UK has a clause in place which means they never have to join the Euro if they don't wish to. But if the British government in power at the time decides to join, it isn't a decision they can go back on. This is often what causes the hesitation in joining.
It is perhaps obvious that by the introduction of a single European currency, some countries are going to benefit more than others. One major currency was never going to be an easy thing to adopt and maintain, as history has shown – leading right back to Roman times.
But despite its sharp fall in value soon after it was declared legal tender back in 2002, the Euro has fought back and is not now viewed with quite as much suspicion in some quarters as it once was.
But will it spread to conquer all of Europe? Only time will tell.