This week’s contribution, at the start of the new year, is not so much about how I wish or expect (which are not the same thing) 2019 to develop, but about an anniversary of an event that has shaped our present. On January 1, 1999, the euro became the official currency in 11 countries. Today, there are 19 countries (including Malta) that have adopted the euro.

Initially it was used just by banks and the financial markets. So it was very much like a virtual currency. In 2002 it entered into circulation and replaced the German mark, the French franc, the Italian lira and a number of other currencies.

It is interesting to note that the smaller EU member states, Luxembourg, Cyprus, Estonia, Latvia, Lithuania and Malta have all adopted the euro as their official currency. The attraction of the euro for small countries is all too evident as even countries, like Andorra, Monaco, San Marino and Vatican City have adopted the euro. 

Initially the euro was exchanged for $1.18. By October of that same year it was exchanged for less than one dollar. There were many who thought that the euro was to have a very short life. It was described as a flawed project. How wrong they were.

Admittedly there have been the ups and downs, such as during the times of the crisis that had hit countries such as Ireland, Spain, Portugal, Cyprus and, of course, Greece, because of their level of sovereign debt and the difficulties that their banks were exposed to. At that time, there were again many who had predicted the collapse of the euro. Even these crises have been overcome.

We would not have grown our economy the way we did without the euro

Against the wishes expressed by some leading European politicians, the European Central Bank exercised its independence and over a number of years, it did anything it could to save the euro. I am using here the words used by the president of the European Central Bank, Mario Draghi, who has provided stability with his leadership that was so much needed in the EU. The words he actually used were: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough”. And it was.

The quantitative easing programme (buying of sovereign and corporate debt) by the ECB which started in 2015 came to an end at the end of 2018. In the meantime, the value of the euro hit highs and lows. When it hit certain highs, fears were expressed that such a value would hurt EU exports. When it hit certain lows, it was said that the euro was on its deathbed.

If we want to put it crudely, there were many who simply did not wish the euro to have a long life and are still hoping that it will not. This is because the euro does represent a threat. The EU as a trading block is the world’s largest. Neither Russia not the US (each for their own national interest, which is to be respected) particularly like the fact of a strong European Union, both politically and economically.

The euro has been blamed by populist movements and certain governments for all the ills that their countries were facing. It was a convenient way of hiding their own mistakes and their own inability to manage a national economy. All too often, such people never stop to think of the cost of not having a currency like the euro would mean to several national economies.

This brings me to Malta. It may have been seen as a brave or even a rash decision at the time, when we adopted the euro in January 2008. It was really a no-brainer. It gave us an international currency, while previously we had a currency which was only usable in Malta. It provided exporters with the stability they seek when trading. Yes, it did bring with it certain rules. However, those rules have served us well. We would not have grown our economy the way we did without the euro.

By the way, this year Malta celebrates that 15th anniversary since we became members of the EU. With the benefit of hindsight, even that decision was a no-brainer. According to the Eurobarometer, 77 per cent of Maltese agree with having a European economic and monetary union with one single currency, the euro. Moreover, another 77 per cent believe that Malta would not face a better future outside the EU.

Maybe this is why anniversaries have a very good use. They help to remind us where we came from to help us understand better where we are now and why we are here now, and where we should be going.