VARIOUS/FILE: From the Maastricht treaty to the feared meltdown of Europe's single currency: some of the...
- Title: VARIOUS/FILE: From the Maastricht treaty to the feared meltdown of Europe's single currency: some of the key steps in the birth of the euro
- Date: 9th December 2011
- Summary: ATHENS, GREECE (RECENT) (REUTERS) VARIOUS OF FIGHTING IN FRONT OF PARLIAMENT IN ATHENS
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- Topics: International Relations,Economic News
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- Story Text: As Europe's leaders rushed to Brussels on Thursday (November 8) to rescue the euro zone and the currency used by more than 300 million Europeans, the heady days of optimism, talks of ever closer union and popping champagne corks could not seem further away.
The process of monetary union was launched in full on February 7, 1992 in Maastricht, a town at the heart of Europe close to Belgium, Germany and Luxembourg. Having extracted key concessions, including the right to opt out of the currency, British Foreign Minister Douglas Hurd put pen to paper under the watchful eye of the then European Commission President Jacques Delors.
The following years were filled with protracted discussions over who would be in, who would be out, what the currency would be called and how to tighten deficits and meet the supposedly inviolable rules for membership -- the so-called Maastricht criteria.
The currency itself was born on January 1, 1999, when the exchange rate of 11 founding members was fixed to the euro, although notes and coins were to remain in circulation for a further three years.
At that stage, the euro was a largely theoretical concept for most people, who were still using francs, lire and deutschmarks and drachma in their daily dealings.
Elation was evident in the halls of Brussels, as normally staid European commissioners made victory gestures and finance ministers all did a Mexican wave.
Jacques Santer, the then Commission president hailed the day as an historic one. The then French Finance Minister, a certain Dominique Strauss-Kahn said it was a giant leap forward.
"In the book of history which will be written in 10 years, 20 years, I'm really convinced that this 31st of December 98 will appear as a historical day," he said.
The next three years were marked by a sense of keen anticipation and rising optimism as Europeans looked forward keenly to the crisp new banknotes and the shiny new coins that were being minted across the continent.
For ordinary people, that moment came just after the stroke of midnight on December 31, 2001, when the citizens of Europe rushed to their automated tellers to withdraw the new currency.
More than a decade on, the euro is mired in controversy, with investors dumping government debt and Europe's leaders issuing dire warnings of the catastrophe that would follow the currency's break-up. Strauss-Kahn is mired in controversy -- his political career in ruins after a series of sexual scandals.
The euro's introduction swiftly led to complaints that it was fuelling inflation, but the currency largely survived the doom-laden predictions of its detractors until the wake of the financial crisis of 2008.
Successive bailouts of Ireland and then Portugal were the early signs that something was wrong, as foreign investors refused to refinance their debt, driving up borrowing costs to unsustainable levels.
But it was the images of violence from Greece, where an angry population was protesting against rigid austerity measures in return for EU funding that became emblematic of the crisis for the population at large.
By early December, French President Nicolas Sarkozy was calling for Europe to be re-founded, warning of the direst consequences if the currency fell apart.
"What will remain of Europe, if the euro disappears? What will remain of Europe, if it's economic heart collapses?" he asked in a keynote speech on December 2. "Nothing."
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- Embargoed:24th December 2011 12:00