Twenty years ago, the euro entered our lives

It was just twenty years ago. January 1, 2022. The distributors spit out the first euro banknotes, an arrival which excited as much as it worried. Imagined in the 1970s as an instrument of integration, aspiring to facilitate commercial transactions and compete with the dollar, the euro entered physical commerce on January 1, 2002, forcing the inhabitants of the twelve countries initially members of the union to abandon their national currency. If the Germans had to give up their beloved Deutschmark for a new currency with a simple conversion rate of 2, others like the French or the Italians had to get used to more complex multiplications.

Helped by plastic converter cards – since relegated to the rank of antiques – the French have thus exchanged their last francs for blazing euros, whose 1 or 2 cent coins were already intriguing. Gone are the familiar figures that adorned banknotes of francs, deutschemark or even pesetas. To suit everyone, the common currency has, on its seven banknotes, Romanesque or Gothic arches or even modern architectural elements, representing the different eras of European history; a “makeover” project is currently underway.

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Since 2002, seven other European countries have adopted the euro (Cyprus, Estonia, Latvia, Lithuania, Slovenia, Slovakia and Malta). And Bulgaria, Croatia and Romania, members of the European Union, should join the club in the coming years. A passage that is not unanimous among the populations, who fear a rise in prices. A fear fueled by the impression, still tenacious in the 19 countries of the zone, of having lost purchasing power, although statistics show on the contrary that the common currency has made it possible to stabilize inflation. Some everyday, inexpensive products, such as counter coffee, did increase with the scale, due to top rounding. But other more expensive products have not increased or even fallen. And in the end, inflation has remained moderate. For example, if the average price of a baguette in France rose from 4.30 francs (or 0.66 euros) in 2001 to around 90 centimes twenty years later, this increase remains in line with that recorded before the changeover. ‘euro, explained in 2017 Insee, the French statistics institute.

Second currency behind the dollar

The euro has slipped into the second most secure currencies, behind the dollar. It now constitutes 20% of the world’s foreign exchange reserves (compared to 60% for the dollar). So much so that political leaders like Marine Le Pen or Matteo Salvini, who for a time promoted an exit from the euro, have since renounced it. Because these twenty years have not been a long quiet river. Less than ten years after its launch, the euro is hit hard by a serious financial crisis, with Greece at the epicenter.

National banks are retreating behind their state borders. The European Central Bank falters, but manages to turn around. In Greece, the banks are closing temporarily, withdrawals are limited, a forced cure of austerity is initiated … Even the animals of Greek zoos are put on a diet. Member States and institutions realized on this occasion “that the architecture of the euro was not originally designed to absorb the seismic shock of the global financial crisis”, remember several finance ministers and members of the the European Commission in a column published on Saturday.

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But these pitfalls and these “early crises have enabled the euro to mature and strengthen its international role” by offering “valuable lessons which have proved useful during the current pandemic”, they assure. To continue to expand its influence, the euro now dreams of realizing its geopolitical ambitions and securing its future in the digital arena. In 2021, the European Central Bank initiated discussions on the creation of a digital euro, backed by the euro and certified by the European monetary institution. History of competing with bitcoin, after having run for two decades behind the dollar.