As a response to the migrant crisis and growing terrorism worldwide, a number of European
countries have increased their border controls.
The EU has long upheld the freedom to travel between member countries.
But these border restrictions are said to potentially threaten the EU economy and specifically,
the Euro.
But could something like stronger borders really affect the Union’s currency?
Just how powerful is the Euro?
Well, the Euro is used as a primary currency by 19 out of 28 countries within the European
Union.
Historically, European countries used their own private currencies, like the lira, the
marc, or the franc.
But with the establishment of the European Union, it made sense to use a common currency.
Europeans would no longer need to exchange money between countries, prices would be relatively
transparent, and the economy would work more efficiently throughout the region.
Countries whose currencies were already stable were given the opportunity to replace them
with a unified currency called the Euro.
This transition occurred on January 1st 1999.
However, in the years since, 9 non-Eurozone countries have maintained their pre-European
Union currencies.
For many this is due to the loss of control over interest rates or currency policy.
For others it is over fears of instability.
However, with the exception of the UK and Denmark, all EU countries are expected to
eventually join the Euro once their economies are good enough.
Additionally, there are several countries and regions not in the EU which also primarily
use the Euro.
This is not all that surprising, as the Euro is used by more than 338 million people every
day, and is the second most used currency in the world.
Since it’s physical introduction, the Euro has been fairly competitive with the dollar,
reaching a high of 1 dollar and 60 cents per Euro during the financial crisis in 2008.
But in recent years, the Eurozone has been dealing with their own crisis, and today the
two currencies are almost equal.
The problem has been that more EU members have been unable to pay their debts, and Iceland
even saw a total collapse of their banking system.
This has made investors reticent to rely on the currency, which is coupled with Greece,
Italy, Portugal and others threatening to tank the Euro’s value.
Meanwhile, the US dollar has seen a slow but steady rise as America’s economy recovers
from the banking crisis.
Overall, the Euro is relatively new, somewhat unstable, and prone to influence from weaker
EU members.
Still, it is an extremely popular currency, and has become the European standard.
The Euro is expected to continue its powerful role in the world economy, but as the Eurozone
crisis continues, nobody really knows what the future holds.
Many people have their doubts about the creation of the Eurozone.
Learn more about the downsides in our video at the top.
Learn more about the instability of the European Union at large in the video at the bottom.
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