BIRTH OF THE EURO - The single currency by Dick Suter
January 1 1999 will be recorded by historians as the day when eleven of the EU member states adopted a single currency. The 290,000,000 inhabitants of these eleven countries - Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain - represent some 6% of the world's population and, perhaps more importantly, 19.4% of world GDP and 18.6% of world trade. It means that for the first time in recent history, Europe will have similar economic clout to the USA.
Economic and monetary union is by no means a new or even a recent idea. As Yves-Thibault de Silguy, the Commissioner responsible for economic, monetary and financial affairs, stated at the European Institute in Washington on April 15, "The Treaty of Rome signed in 1957 set the goal of 'an ever closer union among the peoples of Europe' and the idea of single currency in Europe has existed from the very beginning." He continued, "but to prepare the ground for monetary union, we first introduced the common market, the free movement of capital, the single market and finally a necessary degree of convergence between Member States' economies.".
This last point is particularly significant since the convergence criteria imposed by the Maastricht Treaty of 1992 imposed huge pressures on many of the member states. "In 1993," de Silguy reported, "the 'founder' eleven States had an average inflation rate of 4%. Today, these rates have converged to an average of 1.6%. These countries had an annual budget deficit of 5.5% in terms of GDP in 1993 but by 1997 this had been reduced to 2.5%.".
Euro-sceptics were critical that countries which hovered on the borderlines of achieving the convergence criteria were accepted but, perhaps, they missed one all important point. For those countries, which earlier had not looked likely to meet the criteria, made very special efforts to ensure they met the convergence criteria. A new spirit, fresh optimism was generated, particularly in southern European member states.
From January 1 1999, the euro will be the sole currency of the participating member states but for practical reasons, the euro-denominated bank notes and coins will not be introduced until January 1 2002. Payments made via money transfers and cheques can be made in euros from 1999, however. Euro notes and coins will come into circulation on January 1 2002.
For companies, especially those that live by international trade - importing or exporting, the single currency will take the guesswork out of buying and selling as they will no longer be hostage to exchange rate fluctuations. This, in turn, will produce cost efficiencies and customers, including the final consumer, will benefit.
And just imagine, on a personal level, being able to visit the majority of EU countries without having to worry about changing money every time you cross borders. And wondering whether or not you really are acquiring a bargain. Chances are, in ten years time, we'll all be wondering what the fuss was about and wishing we had enjoyed living with a single currency years before.
©Dick Suter - 1998
Original article appearing in "Internationals in Belgium" Dick Suter was an editor of the magazine and contributor and Ginny Suter was a regular contributor in the late 1990's and 2000's - The magazine had a circulation of 10,000 Please note that this article was first published many years ago and telephone and fax numbers are likely to be out of date and email addresses have been removed.
Source of images, unless otherwise stated - Suter family archives