Euro turns 20 years old

World
Europe

The European Parliament in Brussels is marking the 20th anniversary of the euro with a light show outside on its esplanade.

Nineteen EU countries now use the euro, but they still frequently argue over how it should work.

The currency was introduced as a way to end the decades-long battles over exchange rates between European nations and to facilitate smooth trade.

Back then, Wim Duisenberg, who was the European Central Bank President, said, "The euro has clearly demonstrated it can achieve its main objectives. These include ensuring price stability, enhancing market transparency across national borders, and facilitating commerce, which is communication, both inside and outside Europe."

While the euro was established on paper on the first of January 1999, hard money wasn't printed for another three years.

Twenty years later, there are two main complaints about the euro.

Firstly, countries are unable to kick-start their export sectors by devaluing their currency in times of economic downturn.

Secondly, interest rates are fixed by the European Central Bank and not national capitals, meaning governments can't adjust them when they're trying to encourage businesses to expand.

Those issues came into focus during and after the 2008 financial crisis, when countries in the south were tied in the same currency union as their richer neighbors in the north. The subsequent policies of austerity were felt more keenly in countries like Spain, Italy and Greece.

The prospect of one Eurozone member leaving the euro reared its head after a leftist, populist government swept to power in Athens in early 2015, promising an end to what they saw as Brussels and Berlin-imposed austerity.

People in Greece are still very skeptical of the euro. Vasilis, a university student in Athens, says, "I'd prefer to have stayed in the drachma as long as small businesses received more support. The euro favors big businesses and not the small ones."

The euro still does enjoy widespread support among its member countries, however. According to a Eurobarometer poll, 64 percent of citizens in the Eurozone believes that it's good for their country and 74 percent reckon is a good thing for the EU.

The goal for the EU now is to persuade the eight countries that have their own currency and will still be in the EU after Brexit to join the euro.

Denmark is likely to be the next as the Danish Krone is already directly pegged to the euro on international currency markets.

Guntram Wolff, the director of the Bruegel economic think tank in Brussels, also says that, "In terms of all the indicators, transactions and foreign investments of international central banks and so on, the euro is basically still currency number two; Chinese is rising quite quickly of course. And I'd say that US policies certainly make a case for diversifying out of the US dollar."

Policies of populist governments within the Eurozone could hamper international ambitions, however. A recent crisis over what the EU saw as an overspending Italian budget has only narrowly been averted.

In a statement to mark the 20-year anniversary, current European Central Bank president Mario Draghi said, "After 20 years, there is now a generation who knows no other domestic currency. During that time, the ECB has delivered on its main task of maintaining price stability."

The question now is... how will people feel about the euro in another 20 years.