EURO AT 20 TRAUMATIC ADOLESCENCE HAS COME TO AN END
Leaving 20 years behind, the European shared currency, the euro, became stronger by overcoming the danger of disintegration and the turbulent times.
The Euro is a shared currency of 19 countries with a total economic value of $ 11.2 trillion today.
The President of the Central Bank, Mr. Drahgi managed to keep the Euro alive by flooding the bloc with substantial amount of cash. These words “We will do whatever it takes to protect the euro” went down in history.
President of the European Central Bank, Mario Draghi once compared the euro to the wild bee: “A nature mystery that should not fly but somehow flying
... Draghi used this metaphor, when at the peak of the turbulent Greek debt crisis in 2012; in a time when most people were discussing whether Europe was approaching the end of the single currency.
Like many people who have reached the age of 20, the European currency has experienced a traumatic adolescence as well. Sometimes, most people think that they will never reach that age of maturity. However, it has reached and as most experts say, “This is a success.” But, the experiences were very challenging.
The Euro, which was launched on 1 January 1999, was initially used only in banking and financial investment transactions. Three years later, however, from January 1, 2002, it started to enter the pockets of European citizens and replaced Mark in Germany, Frank in France, Liret in Italy, and Peseta in Spain. Austria, Belgium, Finland, Ireland, Luxembourg, the Netherlands and Portugal are among the first 11 countries to start using the Euro. Today, a total of 19 countries in the 28-member EU use the euro as their official currency. EU members Sweden, Denmark and England refused to switch to the euro.
EURO KEEPS ITS HIGH SPEED
Now, 20 years behind the birth of the Euro, it keeps its high speed and has even risen after some measures. While the number of Euro-member countries was initially 11, this increased to 19.
The first steps of the Eurozone were taken in 1999. The euro area’s economic growth, which was 6.5 trillion euros in 1999, rose by 72 percent to 11.2 trillion euros ($12.8 trillion) in 1999 following the US, while the European Union maintained its position as a global power.
In fact, as Europe is a region of tremendous economic and cultural diversity, this success masks out the differences and fluctuations experienced. The euro has fluctuated wildly since its debut on January 1, 1999, three years before the circulation of banknotes and coins. The euro started its journey as equivalent of 0.86 dollars in January
2002, when the banknotes were launched. Before the 2008 financial crisis, it managed to climb up to 1.60 dollars.
However, both the global financial crisis and the Greek debt crisis caused the Euro to fall to 1.07 dollars in March 2015. The second decade was particularly turbulent, as the debtor members were rescued and the double bottom stagnation would almost dispel the monetary union.
People living in the eurozone support single currency. The euro will survive but further solidarity and more reforms are required among the EU countries.
DRAGHI FLOOD THE BLOC WITH MONEY
European Central Bank (ECB) President Drahgi managed to keep Europe’s single currency dream alive by the flooding the bloc with money. Nevertheless, he did not reverse the damage to the euro’s reputation; the share of the euro in global reserves has fallen by about 30 percent since the 2009 summit.
The euro showed a really good performance. It survived and did not lose any members despite huge shocks and painful crises. The most important reason for this was that the separation of individual members was costly for others. In addition, politicians have demonstrated enough performance to survive during the deepest moments of crisis.
The global financial crisis in 2008 was the biggest event that negatively affected the Eurozone as in the rest of the world. In the European debt crisis, which was triggered by the global crisis, countries such as Greece, Portugal, Ireland, Spain and Cyprus could not pay their debts. Bailout packages were launched with the resources provided from other Eurozone countries, the European Central Bank and the International Monetary Fund.
WHATEVER IT TAKES
While Mario Draghi, in particular, showed the willingness to use the instruments of a modern central bank, he used the expression “We will do whatever it takes to protect the euro” at the peak of the crisis in July 2012. As Daniel Gros
from the Center for European Policy Studies said, “Ultimately, the Euro survived due to the fact that leaders of the member states spent political capital to implement the necessary reforms”.
Well, will the Eurozone survive? Most likely, yes ... The three-quarters of the people in the Eurozone have supported its survival since 2004. 40 percent of adults in the Eurozone do not know any other currency, and about 340 million people use Euro every day. The number of members of the eurozone continued to expand by obtaining a vote of confidence unanimously.
IT WILL SURVIVE BUT NEED REFORMS
According to a study by the European Central Bank, 74 percent of people living in the eurozone, covering 19 countries, think that this currency is beneficial to the European Union and 64 percent to their country. This result was achieved despite the rise of populist parties throughout the European Union.
It is also a fact that further solidarity and more reforms are required among the EU countries in order for the euro to survive. The deep inequalities among the EU economies, the lack of solidarity in the budget, the risk and not taking common actions for investments are breaking the euro’s back.
BEST ECONOMY CARD IN GERMANY
As far as the report cards of the euro members are concerned, Germany remains the brightest economy in the region, despite the fact that it is the largest economy in Europe. It is followed by Austria, Belgium and Finland. Having joined the Union later, Slovakia and Slovenia are among the countries with high grades.
Three of Europe’s five major economies have the worst grades: France, Italy and Spain ... These countries’ excessive indebtedness, deterioration of their competitiveness and other problems led to poor report cards. Cyprus and Malta are also among the worst Euro economies...