“It’s my party and I’ll cry if I want to”, goes a pop song from the 1960s.
Everything seemed to be going along just nicely until the financial crisis came along and shone the spotlight on the institutional shortcomings of the eurozone
And as Europe celebrates the 10th anniversary of the launch of euro banknotes and coins, there must be a great many of the more than 300 million of its citizens who share the single currency who feel like doing just that.
In the decade since the euro replaced their treasured national currencies, there can be few people who have not complained at one time or another that the euro has pushed up prices in every area of their lives.
Now, with the long-running debt crisis threatening to plunge even the wealthiest eurozone states into a deep recession or even a depression, there are a great many who, secretly or openly, clamour for a return of the deutschmark, the franc or the lira.
As a currency, the euro is actually 13 years old not 10: It became the official unit of transaction on the financial markets for 11 countries in 1999.
But it was not until January 1, 2002, that the virtual currency became a physical reality for Europeans, with the launch of euro banknotes and coins in 12 countries.
By mid-2011, 14.2 billion notes and 95.6 billion coins worth a total €870 billion were in circulation in the euro area, since expanded to 17 countries and 332 million citizens, according to data compiled by the institution that manages the single currency, the European Central Bank.
In retrospect, the euphoria that greeted the birth of the world’s number-two currency 10 years ago may, to many, sound a little hollow.
Policymakers, bankers and financiers insist a common currency brings only advantages.
It “increases price transparency, eliminates currency exchange costs, oils the wheels of the European economy, facilitates international trade and gives the EU a more powerful voice in the world,” proclaims the European Commission on its website.
Furthermore, the euro “gives the EU’s citizens a tangible symbol of their European identity,” it insists.
But despite its clear advantages for travellers, “consumers have never really warmed to the euro. They’ve never been able to shake off the feeling that it has led to higher prices,” said Andre Sapir, economist at the Brussels-based think tank Bruegel.
Of course, the official statistics tell a different story: The ECB has succeeded in keeping area-wide inflation down to an annual average two per cent since 1999.
But the basket of goods and services monitored by statisticians when calculating developments in the cost of living are not necessarily those which consumers tend to focus on when they think about rising prices. Hence the discrepancy between “perceived” and “official” rates of inflation.
People’s sense of a European identity has also taken a battering as a result of the debt crisis and interminable political wrangling, unsuccessful so far, to find a solution.
Germans huff and puff over the perceived profligacy of the Greeks or Italians, while the French seem increasingly wary of the dominance of their neighbour across the Rhine.
By contrast, companies are more enthusiastic about the euro, particularly in Germany, where the mighty automobile industry has saved an estimated €300-€500 million each year in transaction costs since the launch of the common currency, according to Bankhaus Metzler analyst Juergen Pieper.
Bruegel’s Sapir countered that the euro was simply “one factor among others” that has helped better integrate the European economy, along with the Maastricht Treaty on economic convergence, the opening of borders under the Schengen treaty and the eastwards expansion of the EU.
“Everything seemed to be going along just nicely until the financial crisis came along and shone the spotlight on the institutional shortcomings of the eurozone,” said Philip Whyte, senior research fellow at the Centre for European Reform, a London-based think tank.
A lack of area-wide fiscal integration and the absence of a common banking supervision fuelled the imbalances in the financial system.
The low interest rates that monetary union brought with it for southern Europe led governments, businesses and households to take on increasingly unmanageable burdens of debt and everyone, including the northern states, underestimated the dangers, Mr Whyte said.
At a summit in December, eurozone states agreed to anchor fiscal discipline in European treaties but still shied away from going down the path of federalism.
No one at this stage is seriously contemplating a return to the old national currencies, even if nostalgia seems to be growing, particularly in Germany where people were fiercely proud of the mighty deutschmark, symbol of the country’s post-war economic miracle.
A collapse of the euro would certainly be catastrophic for European banks because it would lead to a sharp depreciation in the currencies of southern Europe, where banks hold huge amounts of debt.
Germany would be hit too, because its currency would likely rise sharply, throttling demand for its all-important exports, and that could kill jobs.
But nothing like that is on the cards for now, said Bundesbank President Jens Weidmann who recently quipped: “There’s no plan B. There’s no money printing press in the Bundesbank’s cellars.”
Milestones in currency’s history
2002
January 1: Euro notes and coins are introduced across 12 states (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain), becoming legal tender and replacing their national currencies. The currency enters, three years after its birth on January 1, 1999, the daily lives of 304 million Europeans.
March 1: National currencies, which have circulated alongside the single currency for two months, are withdrawn.
July 15: The euro reaches parity with the dollar.
2003
September 14: Sweden says “no” to the euro by 55.9 per cent of votes in a referendum.
2007
January 1: Slovenia becomes the first former communist country to enter the eurozone, less than three years after joining the European Union.
2008
January 1: Malta and Cyprus are admitted to the eurozone.
July 15: The euro hits a record high of 1.6038 against the dollar, which is weighed down by the global financial crisis.
October 12: EU leaders adopt a plan to confront the financial crisis involving hundreds of billions of dollars ofnew initiatives.
November 14: The eurozone officially enters recession, the worst for 60 years. It emerges a year later.
2009
January 1: The eurozone admits its 16th member, Slovakia.
May 7: The European Central Bank cuts its main interest rate to a record low of 1.0 per cent and says it will start buying bonds to stimulate the economy.
December: Concerns rise over the sovereign debts of some eurozone members, notably Greece.
2010
May 2: After crisis talks, eurozone governments agree to a massive bailout plan for Greece, the first victim of the debt crisis, with input from the International Monetary Fund.
May 10: The EU announces plans to set its own bailout fund – European Financial Stability Facility (EFSF).
June 4: The euro falls under $1.20 for the first time since March 2006.
November 28: The EU and IMF agree on a €85 billion bailout for Ireland.
2011
January 1: Estonia becomes the 17th eurozone member. More than 330 million Europeans now use euro notes and coins.
May 5: The EU and IMF agree a 78 billion euro bailout for Portugal.
July 21: Eurozone leaders agree on a new bailout for Greece worth €159 billion and to boost the eurozone’s bailout fund.
August 16: France’s Nicolas Sarkozy and Germany’s Angela Merkel vow to give the eurozone bloc a “true economic government” and say they will propose an EU-wide tax on financial transactions.
Over a week, the ECB buys €22 billion of government bonds in a bid to support Italy and Spain which are attacked on the markets.
October 27: Eurozone members agree on a pact to tackle the debt crisis, by shoring up the bailout fund and pushing banks to take a loss on Greece’s debt.
December 9: EU leaders, except Britain, band together to back tighter budget policing after a heated summit.