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Twenty years ago, on 1 January 2002, twelve EU countries exchanged their national currency banknotes and coins for the euro in the biggest currency changeover in history. During these two decades, the euro has contributed to the stability, competitiveness and prosperity of European economies. More importantly, it has improved people’s lives and made it easier to do business across Europe and beyond. With the euro in your pocket, saving, investing, traveling and doing business just got a whole lot easier.
The euro is a symbol of EU integration and identity. Today, more than 340 million people use it in 19 EU countries, with 27.6 billion euro banknotes in circulation worth around €1.5 trillion. The euro is currently the second most widely used currency in the world behind the US dollar.
As he celebrates this 20and anniversary, the EU continues work to strengthen the international role of the euro and adapt it to new challenges, including the rapid digitization of the economy and the development of virtual currencies. As a complement to cash, a digital euro would support a well-integrated payments industry and provide greater choice for consumers and businesses.
Ursula von der Leyen, President of the European Commission, said: “We Europeans have been able to carry Europe in our pockets for twenty years now. The euro is not only one of the most powerful currencies in the world. It is above all a symbol of European unity. Euro banknotes have bridges on one side and a door on the other, because that is what the euro represents. The euro is also the currency of the future and in the coming years it will also become a digital currency. The euro also reflects our values. The world we want to live in. It is the global currency for sustainable investments. We can all be proud of that. »
David Sassoli, President of the European Parliament, said: “The euro is the embodiment of an ambitious political project in favor of peace and integration within the European Union. But the euro is also a condition for protecting and relaunching the European economic, social and political model in the face of the transformations of our time. The euro is a symbol, the realization of a historical political vision, an old vision of a united continent with a single currency for a single market.
Charles Michel, President of the European Council, said: “The euro has come a long way, it is a real European success story. I would even say that the euro is part of who we are. And how we see ourselves as Europeans. Part of our mindset. And part of our European spirit. The euro belongs to all of us, European citizens. But it is not only a success within our European borders. It has also established itself on the international scene. Despite the crises, the euro has proven to be resilient, a symbol of European unity and stability. And that has never been truer than during COVID-19. The euro served as the foundation for stability. A stable asset for the Union. The euro is also fueling our recovery. Unlocking the full potential of sustainable development, quality jobs and innovation.
Christine Lagarde, President of the European Central Bank, said: “The euros we hold in our hands have become a beacon of stability and solidity in the world. Hundreds of millions of Europeans trust it and do business with it every day. It is the second most international currency in the world. As President of the European Central Bank, I pledge to continue working hard to ensure that price stability is maintained. And I am also committed to renewing the face of these banknotes and also giving them a digital dimension.
Eurogroup President Paschal Donohoe said: “The euro has proven itself in the face of major economic challenges. In particular, our response to the COVID 19 pandemic has demonstrated that by sharing the euro we can achieve more collectively than individually. The euro has strengthened its foundations over the past 20 years. Now we must build on these foundations to make the euro the global currency for the transition to a low-carbon future. »
A long trip
The euro has come a long way since the first discussions on an Economic and Monetary Union in the late 1960s. Specific steps towards a single currency were first discussed in 1988 by the Delors Committee. In 1992, the Maastricht Treaty marked a watershed moment in the changeover to the euro, with political leaders signing the criteria that member states had to meet to adopt the single currency. Two years later, the European Monetary Institute (EMI) began its preparatory work in Frankfurt for the European Central Bank (ECB) to assume its responsibility for monetary policy in the euro area. As a result, on June 1, 1998, the ECB became operational.
In 1999 the euro was launched in 11 Member States as a currency of account in the financial markets and used for electronic payments. It was finally on January 1, 2002 that Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain exchanged their national banknotes and coins for euros. Slovenia joined the euro zone in 2007, followed by Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015). Currently, Croatia is taking preparatory steps to join the Eurozone, which it plans to do on January 1, 2023, provided it meets all the convergence criteria.
Twenty years of benefits for citizens and businesses
The euro has brought many benefits to Europe, especially its citizens and businesses. The single currency has helped maintain price stability and shielded euro area economies from exchange rate volatility. This made it easier for European homebuyers, businesses and governments to borrow money and encouraged trade in Europe and beyond. The euro has also eliminated the need for foreign exchange and reduced the cost of transferring money, making it easier to travel and move to another country to work, study or retire.
A large majority of Europeans support the single currency. According to the latest Eurobarometer, 78% of euro area citizens think the euro is good for the EU.
A strengthened international role
The euro is the second most important currency in the international monetary system. Its stability and credibility have made it an international billing currency, a store of value and a reserve currency, accounting for around 20% of foreign exchange reserves. Sixty other countries and territories in the world, which are home to some 175 million inhabitants, have chosen to use the euro as their currency or to peg their own currency to it. Today, the euro is used for nearly 40% of global cross-border payments and for more than half of EU exports.
Since the global financial crisis of 2008 and the subsequent sovereign debt crisis, the EU has continuously strengthened and deepened the Economic and Monetary Union. The EU’s unprecedented recovery plan, NextGenerationEU, will further improve the economic resilience of the euro area and strengthen economic convergence. The issuance of high-quality denominated bonds under NextGenerationEU will add significant depth and liquidity to EU capital markets and make them and the euro more attractive to investors. The euro is also now the leading green investment currency: half of the world’s green bonds are denominated in euros, and this figure is increasing thanks to new green bonds issued to finance NextGenerationEU.
In order to further develop the international role of the euro, the Commission has launched awareness-raising initiatives aimed at promoting investments denominated in euros, facilitating the use of the euro as invoicing and denomination currency and fostering better understanding of the barriers to its wider use. This outreach will take the form of dialogues, workshops and surveys with the public and private sectors, financial regulators and institutional investors in EU regional and global partner countries.
