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the euro
What is it?
The euro is the currency of 13 of the 27 EU member states. It came into
existence on 1st January 2002, replacing those countries' existing currencies.
In the case of the Greek drachma, a currency so ancient that it is mentioned
in the plays of Aristophanes was consigned to the dustbin of history.
Originally member states could decide whether they wanted to join the euro or not, but Brussels has since made it a condition of EU membership, so that the most recent countries to join the EU, Bulgaria and Romania, had no choice but to accept the euro.
Unlike any other currency, euro notes are decorated with pictures of non-existent buildings, bridges and other structures, because it was felt that to use real buildings might foment rivalries and jealousies between member states, as some nations saw their most famous building assigned to a lower value note than their neighbour, other nations were left out entirely etc. (This should give pause for thought to those who claim that we all think of ourselves as "European" these days rather than French, German, Italian etc.) Some have said that this makes the euro a perfect metaphor for the European Union itself, an ersatz government with only the trappings of a real one, cheerfully oblivious to the fact that there is no European polity for it to govern.
What are the supposed advantages?
1) Tourism. It might seem undeniable that tourists find it convenient
to be able to cross borders without needing to change their money. However,
what tourist these days doesn't have a cashpoint (ATM) card that makes
it easy to get hold of the local currency, and credit cards that can be
used everywhere? The era of tourists having to get foreign currency from
their bank or travel agent before leaving home was over long before the
single currency was introduced.
2) Business. It is argued that the single currency has led to lower prices because of price transparency ie businesses can more easily compare the prices of different suppliers around the continent. This argument seems a little weak – are business people unable to understand exchange rates or use a calculator? As for lowering prices, the truth is that when the euro was introduced, many wholesalers and retailers took the opportunity to hike up their prices, hoping their customers wouldn't realise.
Furthermore, the eurozone countries are required to adhere to the Stability and Growth Pact (SGP), artificially keeping their economies in line with each other. This robs them of many of the tools they formerly used to manage their economies – for example, Italy used regularly to devalue the lira as a counter-inflationary measure, and is struggling now that it can no longer do this. This has created a strong anti-euro sentiment in Italy.
If the SGP seems unworkable, trying to force an artificial similarity on vastly divergent economies, this may be because it was only ever intended to be a short-term measure, paving the way to full political union. The single currency itself was intended not as an economic goal in its own right, but as a bridgehead that brought the true political goal, a single European state, one step closer.
What do the people of Europe feel about it?
In January 2007, a Financial Times/Harris poll reported:
"An overwhelming majority of citizens in the big eurozone countries believe the euro has damaged their national economies... More than two-thirds of the French, Italians and Spanish – and more than half of Germans – believe the single currency has had a "negative impact"... more than half of citizens in countries using the euro say they prefer their former national currency, according to the poll of 5,314 adults in Germany, the UK, France, Spain and Italy, which was conducted between January 10 and January 22. Almost two-thirds of Germans say they preferred their former currency, the D-Mark."
This has resulted in shops throughout Europe choosing to accept their former currencies, and in parts of Bavaria the old currency is even being issued once again. The majority of French and Spanish want a return to dual pricing – with the national and European currencies side by side on price labels.