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The Euro: How a Common Currency Helped Europe Achieve Peace

December 28, 2018 in History

By Erin Blakemore

It could have been a disaster: runs on banks, uncashed checks, confusion at the counter. But by all accounts, the European Union’s switchover from a rainbow of different currencies to a single currency, the euro, was so orderly it was downright dull.

“The boring thing about the euro is that everything is working so well,” a German retailer told the New York Times in late January 2002, a few weeks after 8.1 billion euro notes flooded the market.

The transition may have been quick and quiet. But the road to a common European currency was a bumpy ride from economic confusion to eventual unity. Here’s a brief history of the money that has come to define the hopes of the European Union.

The currencies of the 15 EU-member countries over their flag and a 1 EURO coin.

A vision of peace led to the first economic union in Europe

It all began with the Treaty of Paris, a 1951 treaty negotiated in the aftermath of World War II. Officials at the time worried that hyperinflation and economic instability similar to that experienced by Germany after World War I might ensue. So European nations decided to band together not just to stabilize their economies, but minimize the chance of another devastating war.

In 1951, the treaty established the European Coal and Steel Community, which united steel and coal production in France, West Germany, Belgium, Luxembourg, and the Netherlands. Since France and Germany had long been enemies, it was thought that pooling the production of two materials essential to waging war would essentially make fighting one another impossible. It also created a common market for those commodities, kicking off the slow movement toward a common currency that would follow over the next half-century.

In 1957, the Treaty of Rome created the European Economic Community, a common market which gradually eliminated customs and other trade barriers between the six nations. In 1967, both groups merged with the European Atomic Energy Committee to form the Commission of the European Communities, which was joined by other European nations throughout the years.

Economic volatility made currency reform more important than ever

Europe was peaceful, and the currency of its various nations stable, for now. Common market countries grew more prosperous over the 1950s and early 1960. But the late 1960s threatened that newfound prosperity when international currency began to experience large swings in value. …read more


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