What Is the Euro and Where Did It Come From?

The euro is the name of the currency that is currently being used by the European Union. Most countries within this union of states have abandoned their traditional currencies and opted for this centralized currency for the purpose of making things simpler and unifying Europe under one banner. While the merits and demerits of the development of this currency can be debated incessantly, in order to understand this currency, one must start by looking at its origins and history.

The History of the Euro

Euro became available in paper currency form in 2002 after being introduced electronically three years prior, but the first mentions of a centralized European currency actually started in the late 1920s after the end of the First World War. Post-war Europe saw the establishment of several new countries, all of which came with their own unique currencies. This made commerce complicated, and a member of the League of Nations proposed that centralized currency would be introduced.

Nothing would come of this proposal for forty years, however, until 1969 when a meeting of the European Council at The Hague proposed an economic union. This was not a centralized currency but an economic union whereby participating countries would peg their exchange rates in order to mitigate volatility between the different currencies currently present. The proposal was a failure, but it is important to note as the first legitimate attempt to unify Europe as far as economy and commerce are concerned.

The next major event that expedited the creation of a single European currency was a major change in the US dollar. In 1971, the dollar stopped backing itself using gold reserves and switched to a managed float. This wreaked havoc on the world’s currencies, and the European Council formed the ECU or European Currency Unit. This was an accounting unit that was only present on books, and its primary purpose was to stabilize European currencies so that there was no actual paper money that people could spend, but for all intents and purposes, this was the first centralized European currency and a precursor to the euro.

Over the next two decades, support began to surface for a single European currency. People wanted to see progress, and they wanted something that would allow them to remain stable in an increasingly hostile economic environment. However, the UK staunchly opposed a unified currency because it wanted to maintain its national identity, especially in the wake of the turmoil that led to the creation of the modern world. Germany was also opposed to the idea of a unified currency because the mark had only just started to regain its foothold in the world of commerce and become a stable currency for the country. Denmark was another country that did not want any part in the centralized European currency as it believed that it did not need any potential benefits that the currency might have provided in the future.

Eventually, the euro became an important part of debate and after the formation of the European Union and the economic benefits that it provided, countries started to opt for the euro in order to take part in the centralized system of commerce that was starting to develop. By this point, the euro had become a mainstay of all commerce in Europe. Even though the UK and Scandinavian countries did not opt in, practically every other country in the European Union chose to do so, making it easier for people to move across state lines and spend money which is an important part of commerce.

Conclusion

The euro is an important part of the world’s commerce, and it is going to play a very important role in the days to come as well. The world’s currencies are slowly uniting, and the euro is one of those that has paved the way for future nations to consider having a single currency that can be used anywhere. It is not unlikely that we would see a global digital currency that would be usable in any country in the world, which would make it easier to unite the nations of the world under a single banner.

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