euro

Euro and Eurozone - Europe's single currency

The official currency of the European Union,  the Euro can be traced to the European Exchange Rate Mechanism which began in 1979. The ERM was an accounting scheme that aimed at stabilising European currencies by restricting fluctuations in values within an agreed upper and lower band. The participating currencies were grouped within a ‘basket of currencies’ and assigned values based on their average worth when compared to others within the basket. Currencies were permitted to move 2.25% above or below their predetermined level. In 1990 the UK joined the ERM and in 1992 the British Government spent £6 billion of taxpayer’s funds to maintain Sterling within the band when it came under intense pressure from currency speculators personified in George Soros. The Hungarian born Jewish American (subsequent inside-trader) pocketed over US$1 billion when the UK was forced to leave the ERM on Black Wednesday 16th September 1992. In 1993 the currency band was increased to 15% following a speculative attack on the French Franc.

In 1998 member currency exchange rates were frozen in preparation for monetary union. On 1st January 1999 the Euro was born as an accounting currency and exactly three years later notes and coins were issued to replace the 12 currencies of the new Eurozone. Since 2002 five further EU  members have replaced their currencies with the Euro – Slovenia, Cyprus,  Malta, Slovakia and Estonia on 1 January 2011.  All members of the European Union have pledged themselves to adopting the Euro with the exception of the UK and Denmark,  while Sweden  rejected the currency in a referendum in 2003. The microstates of Andorra,  San Marino,  Monaco, the Vatican  as well as Kosovo, Montenegro and Northern Cyprus use the Euro as do some French overseas territories. Eleven other currencies are pegged to the Euro either formally or informally.

Euro collapse - 2011 - didn't happen

So-called growth in the 'Celtic Tiger' - Ireland was principally paid for by personal and government borrowing. Similar fiscal indiscipline in Greece, Portugal, Italy and Spain precipitated a crisis that risked tearing the Eurozone apart. Basically countries who have lived within their means, such as Germany, Finland, Holland, Slovakia, Luxembourg and Austria were asked to pay for the excessive spending of the others. It would have been better for Greece, Portugal and Italy to leave the Eurozone and reintroduce their own currency, so they could devalue and recover through exporting and attracting tourist. Their continued use of Euro prevented this and has kept their economies in permanent recession. Speculations about the Euros demise in 2011 were premature. Some commentators have even questioned if the media's attention is been an orchestrated attempt by US interests to distract attention from their own perilous financial state. 

European Central Bank

The Euro is administered from the European Central Bank in Frankfurt and is modelled on Germany’s envied Bundesbank. The ECB Governing Council is made up of members from each of the 16 member states own Central Banks and has complete independence from EU bodies and member states institutions. Each member of the Eurozone mints their own unique coins which are uniform in size and legal tender throughout the zone. Euro banknotes are standardised. Numismatic collectors highly prize the rarer Euro coins from the Vatican and Monaco particularly.

Future

Britain’s disastrous first steps towards currency union defeated by economic saboteurs like George Soros show the value a single currency can make to an economy. Currency union offers guaranteed exchange rate stability which is an essential component in planning profitable trade. Trade within the Eurozone now no longer requires the added expense of exchange rate hedging with importers and exporters conducting transactions with complete certainty of return. The ECB manages the Euro with discipline and foresight, displaying a concern for fiscal responsibility long absent from the US’s Federal Reserve. As the GDP of the member states of the Eurozone now exceeds the USA and as they show no willpower, interest or alarm at their spiralling debt it seems certain at some point approaching soon that the Euro will replace the US Dollar as the world’s primary international currency.