Europe Explore Europe Like Never Before!

Euro History

Since the end of WW1, the Euro has been the dream of many a politician; the idea being to bind the member states of the EU together with a single currency that would facilitate trade and tourism and prevent war.

In some respects the Euro was a success, and certainly the ambition of having a single currency between multiple countries has been achieved. However in light of the current Eurozone crisis it’s hard to say whether this success is likely to continue, or even whether it should have begun in the first place. While this is a matter of opinion, and there is still everything to play for, the history of the Euro has no doubt been a colorful and fascinating one. Here we will look in more detail at the history of the Euro from its inception to the current challenges it faces.

1999

1999 is an important day for the history of the Euro and marks its inception.

2001

Greece joins the Euro

2002

Coins and notes are now introduced

2007

Slovenia joins

2008

More countries join the Euro: Malta and Cyprus. This is also the point in the history of the Euro when things started to become more complicated and the growing financial crisis leads the EU leaders to agree a 200 billion Euro stimulus plan to boost the economy.

2009

Slovakia joins. Meanwhile Estonia, Denmark, Lithuania and Latvia join the ‘Exchange Rate Mechanism’ which brings the currencies and policies in line with the Euro to prepare for joining.

The EU orders France, Spain, Ireland and Greece to reduce budget deficits (which is the difference between spending versus tax).

Concerns grow about the debts of some EU member states. Greece admits to debts of 300 billion Euros – the largest in modern history. This is 113% of their GDP which is double the agreed Eurozone limit. This is a difficult time in the history of the Euro.

2010

A report condemns inconsistencies in Greek accounting procedures and revises the budget deficit to 12.7% from 3.7% – four times the maximum allowed by EU rules. This is later fixed to 13.6%. Concerns grow regarding other heavily indebted countries – Portugal, Ireland and Spain. The Euro falls against the dollar and the pound.

The Eurozone agrees a safety net of 22 billion Euros to help Greece. Greece are told to cut spending and this results in riots and protests. The EU agrees to provide up to 30 billion in loans. Eventually in May the Eurozone members provide Greece with a 110 billion bailout package funded by wealthier members such as Germany. The Euro continues to fall and the Irish Republic comes under scrutiny before receiving a bailout package of 85 billion Euros. Rumors mount that Portugal will be the next bailout in the history of the Euro.

2011

Estonia joins the Euro as the 17^th member state. The Eurozone meanwhile sets up a bailout fund – the ‘European Stability Mechanism’ worth 500 billion. In May Portugal receives a bailout of 78 billion. Rumors mount that Greece will need to be the first country in the history of the Euro to leave the currency, but a new series of austerity measures (spending cuts) wins approval from the EU. They receive another bailout of 109 billion Euros.

European Commission president Jose Manuel Barroso warns of contagion of countries outside the Eurozone. Yields on bonds from Italy and Spain rise dramatically and Germany falls to all-time lows as a result of investors needing huge returns. The European Central Bank commits to buy Italian and Spanish bonds. Spain and Italy restrict spending.

Evangelos Venizelos, Finance Minster for Greece, accuses the EU of using Greece as a scapegoat for their incompetence. Growth in the Eurozone’s private sector shrinks for the first time in 2 years. US and UK politicians urge the Eurozone to try to prevent the spreading of its financial difficulties. Franco Belgium bank Dexia receives a bailout.

History of Euro