THE EMERGENCE of Euro is not the story of days, but the idea is very old and absorbed years in establishment. In 1807, the great French General, Napoleon Bonaparte, desired “the whole of Europe to have one currency, as it will make trading much easier.” But in real terms, the creation of Euro starts from the Treaty of Rome in 1957, which declared a common European market with the desire of increasing economic prosperity and contributing to “an ever closer union among the peoples of Europe.” This was a leap towards the modern Euro currency.
The Treaty of Rome was signed by Germany, France, Italy, Belgium, Luxembourg and the Netherlands. On March 13, 1979, the European Monetary System was launched based on average behaviour of the participant countries of the European community. A country is on track just as long as its exchange rate with respect to European Currency Unit (ECU) did not depart too much from a fixed value — the ECU central rate. In 1986, the Single European Act and in 1992 the Treaty on European Union introduced the Economic and Monetary Union. On May 1993, the Maastricht Treaty was approved in Denmark. On Jan 1, 1994, the European Monetary Institute (EMI) in Frankfurt Germany was established with an aim to implement a common European monetary policy, conduct foreign exchange operations, hold reserves of member countries and promote smooth payment mechanisms. EMI is also monitoring inflation, government debt and interest rates.
In Madrid, Spain, in December 1995, the European Council adopted the name “Euro” for the desired currency. EUR is the official abbreviation for the Euro which has been registered with the International Organization for Standardization (ISO) and is used for business, financial and commercial purposes. Its symbol is inspired by Greek letter Epsilon. It refers to the first letter of the word “Europe”. Parallel lines on symbol represent the stability of the Euro. The European Central Bank (ECB) was established on June 1, 1998. It is based in Frankfurt and Main, in Germany, and aims to maintain price stability and to conduct a single monetary policy across the Euro zone. On January 1, 1999, Euro was launched as an electronic currency. On January 1, 2002, it became legal tender money and replaced the old currencies of member states of Euro zone.
Financial authorities considers Euro not only a currency but also much more than it. At start, banknotes and coins over 664 billion Euro were issued, Among these 50 billion Euro coins had one side common and reverse side was specific to each country, while 14.5 billion Euro coins were same throughout the Euro area. After three years of transition period, in which currencies of 11 countries co-existed, on June 30, 2002, the Euro became the sole currency in the region. In the beginning Portugal, Belgium, Luxembourg, Netherlands, Austria, Finland and Ireland accepted Euro, whereas Greece joined the Euro zone on January 1, 2001. This was one of the greatest changeover in monetary sector since the fall of the Roman Empire.
Denmark, Sweden and Britain are members of the European Union but are not currently a part of the Euro zone. Denmark is a member of the European Union since 1974. She rejected an offer to join the Euro zone in September 2000. In his New Year speech on January 2003, Danish Prime Minister, Anders Fogh Rasmussen, has said that by opting out of the Euro, Danes had no influence in vital areas of cooperation within the European Union. But he said a vote should only be held after 2004, when the content of the European Union’s revised basic treaty is known. Majority in the Danish Parliament also press for Euro membership, urging voters to get rid of the clauses. At this time, Denmark is a member of the Exchange Rate Mechanism II (ERM II), which means that the Danish Kroner is linked to the Euro, although the exchange rate is not fixed.
Sweden decided not to adopt the Euro when it debuted in 1999, and rejected it again overwhelmingly in a referendum in Sept 2003. The referendum held on September 14, 2003, was a clear victory for the opponents of the Euro. In the referendum the question asked was: “Do you think Sweden should introduce the Euro as its currency?” The proportion of ‘Yes’ votes was 42 per cent; the ‘No’ were 55.9 per cent, whereas 2.1 per cent cast a blank vote. The participation level was relatively high: 82.6pc turned out to vote. Even though the choice to keep the Kroner is not eternal, but a new referendum looks far. The Euro referendum revealed that Euro supporters are still in minority, mainly located in the well-off urban areas.
Britain being politically and economically one of the most important countries in Europe is paying the price for her old friendship with America. To date, Britain has not accepted the Euro as its legal tender. Many renowned economists of the UK, including Professor Richard Portes and Lord Currie of the London Business School, Professor Chris Pissarides of the London School of Economics and Professor Peter Spencer of the University of London, think: “Our country’s (Britain’s) membership of the EU has made our country more prosperous. Joining the Euro would safeguard those gains.” Professor Jeffrey Frankel, who was a member of the US Council of Economic Advisors, argued, “The Euro zone would be strengthened by UK membership, which would mean adding London, Europe’s leading financial centre, to the currency zone.” Former cabinet minister, Peter Mandelson, warned, “We can only take our American links and our American friendship into the heart of Europe if we are fully in Europe, and trusted in Europe. Until we come off the fence over joining the Euro, our European partners will not come off the fence over Britain’s role in Europe. The question of the Euro, more than any dispute over America, will determine our future position in the EU.”
When Euro was on paper, expectations about its future was not much higher but response from all around the world granted it the status of the currency of the future. Economists were comparing it with the US Dollar. With the creation of Euro, a bi-polar currency regime dominated by Europe and the United States, with Japan as a junior partner, replaced the Dollar-centred system.
