I cannot start 2009 without a nod to the euro, which celebrates its tenth birthday this year and provides so much work for us banking folks, especially those of us in the payments world.
The euro has had an interesting period of formulation from its origins in 1992:
Maastricht Treaty signed by European Union’s Member States to create an Economic and Monetary Union (EMU)
Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain join the EMU, and
adopt the euro as a trading currency
Greece joins the Eurozone
The EU12 countries in the EMU
replace national currencies with euro notes and coins
Slovenia becomes the 13th member of the euro currency group
Malta and Cyprus join the Eurozone
Slovakia joins the Eurozone.
total, we now have 16 countries officially using the euro covering 325
million people, more than the population of the USA.
There are also several
countries planning to join in the near future: Estonia in January 2011;
Bulgaria, Latvia and Poland in 2012; Lithuania in 2013; Romania in
2014; and the Czech Republic in 2015.
I also say 16 countries are ‘officially’ using the euro because there are many more who recognise it as legal tender, such as the French overseas territories of French
Guiana, Réunion, Saint-Pierre et Miquelon, Guadeloupe, Martinique,
Saint-Barthélemy, Saint Martin, Mayotte, Clipperton Island, and the
French Southern and Antarctic Lands; the Portuguese regions of the
Azores and Madeira; and the Spanish Canary Islands.
So happy tenth birthday, euro.
What’s the outlook for the euro in 2009?
year we see the critical milestone of the euro gaining an integrated
infrastructure to support it, with the launch of the Single Euro
Payments Area’s Direct Debits (SDD) in November. There are also legal
structures coming into play thanks to the Payment Services Directive
(PSD), which will also become law across all EU member states in
Now, there are plenty of
nay-sayers out there who claim that SEPA and the PSD are not working,
taking too long, don’t have the volumes and such like.
are strains on the euro of course.
For example, the strength of the
euro against the pound and dollar recently is challenging nations such
as Italy, Spain and Portugal in terms of interest rates, tourism and
But whatever you think about the euro, it’s here.
Is it here to stay?
Well, I’ve asked that question before, and the answer is yes. It is here to stay.
Although no country has left
the euro yet – we have only seen countries joining – I wholly expect
that there will be a casualty or two over the next five years.
because of unemployment, interest rates, the liquidity issues in the markets, the challenges of change and more. This is why some countries are regularly accused of dragging their feet
over Financial Directive changes, such as with SEPA and MiFID. Spain in
particular is viewed a laggard, but then it might just be the manana
Now I’m not saying Spain or Italy will leave the euro,
but it would not surprise me if someone did in the future. Why else would most large French shops still operate in dual currencies
– the euro and the franc. The French franc disappeared in 2002, but it’s still there in spirit, if not in body.
Someone will leave one day, but it is here to stay because, even
though you might find the strains in some countries during these
hard times, you still have the celebrations of the new countries
joining the Eurozone, such as Slovakia.
the euro is still a bit of youngster, but it’s now a decade on this
Earth and is challenging to become the reserve currency of the world.
Not bad for a ten year old.
Happy birthday euro.
Here's the special celebratory 10 year Euro coin, designed by the Central Bank of Greece.
And here are the euro bank notes in circulation.
Note the €500 note, as some countries do not issue or accept them. This is because the €500 note is the most susceptible to money launderers, being one of the largest available notes in circulation!
There's also the rising popularity of euro bonds versus pound, yen and dollar.
And the strength of the euro, particularly over the last year.
Pictures courtesy of Europa and Bank of England.