Victoria Gierok at Project Syndicate: Twenty-five years ago, the euro was introduced, in virtual form, as the common currency of the eurozone, which consisted of 11 countries. Banknotes and coins came three years later, in 2002, and 20 countries now use them. Despite being the youngest fiat currency in the Western world – the same age as “Gen Z” – the euro is undeniably powerful. It is the second most widely held reserve currency (accounting for 20% of official foreign reserves as of 2023), and the second most traded currency after the US dollar, which was introduced in 1792.
Given that the dollar did not challenge the British pound’s global dominance until the twentieth century, the rapidity of the euro’s adoption is striking, especially considering that several powerful European countries – the United Kingdom, Denmark, and Sweden – refrained from joining. Nor was the euro spared from growing pains. Its adolescence coincided with the 2008 global financial crisis and the (related) European debt crisis of the early 2010s. The future of the euro looked shaky, and many doubted its viability.
But then came the soundtrack that would save the struggling teenager from its downward spiral: European Central Bank President Mario Draghi’s vow in 2012 to do “whatever it takes” to save the euro. Despite major political and economic upheavals in the intervening years – including the 2015 refugee crisis, Brexit, the COVID-19 pandemic, and Russia’s invasion of Ukraine – the euro has never again been questioned in the same manner.
As a young adult, however, the euro has come of age at a time when European politics is tending toward fragmentation and a renewed emphasis on national sovereignty. Maintaining a common currency across disparate economies and political environments remains a tall order. But by examining the history of earlier common currencies, we may be able to venture some conclusions about the euro’s future.
More here.
