The Euro Reaches 10

On January 1, 1999, a new currency was launched in Europe – the Euro. Only 11 countries used it then and it was an experiment in a way. The Euro was supposed to create a safe zone for trading and lower borrowing costs for those who used it. Many were skeptical of the outcome. They had even more of a reason to be skeptical as the euro plunged in value almost momentarily. However, it recovered.

Ten years after the Euro was introduced in Europe, Economists say that the euro is finally fulfilling the promises for lowering borrowing costs, making trade and tourism easier, and strengthening the European economy. What is so impressive about the success of this European currency is that its success is occurring amidst a global financial crisis. Furthermore, smaller countries whose currencies are sinking are finding the Euro as the more appealing currency. Otmar Issing, a former board member of the European Central Bank, said “the Euro's appeal has been its ability to provide a sense of stability and shelter from the storm of global crises.”

During the first ten years of the Euro, many complained that the bank used an interest rate policy that couldn’t give rate cuts to individual countries when they were having economic problems. Thus the Euro plunged from $1.18 to only 82 cents by the end of 2000. Things are different now. As the credit crisis has swept over the global economy, the Euro has become stronger – it has risen against the British pound and is worth about $1.40. Also, about 15 million jobs have been created in the last six years because trade and travel have been much easier due to the single market that the Eurozone provides. It has also invited more foreign investment.

In conclusion, countries that have adopted the Euro as their official currency, most recent being Slovakia, are now enjoying a more efficient bond market and with less inflation.

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