Manila Bulletin

At 20, euro is currency giant on fragile footing

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FRANKFURT AM MAIN (AFP) – The euro turns 20 on Tuesday, marking two tumultuous decades that saw the single currency survive a makeor-break crisis and become a fixture in financial markets and Europeans' wallets.

But it is destined to remain a fragile giant without closer eurozone integratio­n, observers say.

Born on January 1, 1999, the euro initially existed only as a virtual currency used in accounting and financial transactio­ns.

It became a physical reality for Europeans three years later, and its coins and notes are now used by over 340 million people in 19 European Union countries.

The currency wasn't immediatel­y loved, with many perceiving its arrival as an unwelcome price hike. In Germany, it was nicknamed the ''teuro'', a pun on the German word for expensive.

But the ease of travelling and doing business across borders in the euro area without having to worry about foreign exchange fluctuatio­ns quickly won hearts and minds.

Today the euro is more popular than ever despite the rise of euroscepti­c, populist movements in a slew of countries.

In a November survey for the European Central Bank, 74 percent of eurozone citizens said the euro had been good for the EU, while 64 percent said it had been good for their nation.

''The euro is anchored in the population, even anti-establishm­ent parties have had to acknowledg­e that,'' said Nicolas Veron, a fellow at the Bruegel think tank in Brussels and the Peterson Institute for Internatio­nal Economics in Washington.

The euro is now the world's numbertwo currency, though it remains some way off from challengin­g the dominance of the US dollar.

The euro reached a defining moment when the aftershock­s of the 2008 financial crisis triggered a eurozone debt crisis that culminated in bailouts of several countries, pushing the currency union to breaking point and severely testing the club's unity.

Experts say the turbulent time exposed the original flaws of the euro project, including the lack of fiscal solidarity through the pooling of debt, investment­s and therefore risks, or the lack of a lender of last resort.

The turmoil also highlighte­d the economic disparity between member states, particular­ly between the more fiscally prudent north and debt-laden southern nations.

ECB chief Mario Draghi was credited with saving the euro in 2012 when he uttered the now legendary words that the Frankfurt institutio­n, in charge of eurozone monetary policy, would do ''whatever it takes'' to preserve the currency.

The ECB promised to buy up, if necessary, unlimited amounts of government bonds from debt-stricken countries. The scheme, known as outright monetary transactio­ns, succeeded in calming the waters but has never actually been used.

 ??  ?? The progressio­n of the euro versus the dollar over the last 20 years. (AFP)
The progressio­n of the euro versus the dollar over the last 20 years. (AFP)

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