December 14th, 2008


Saying ¥€$ to the euro

Probably the two most positive forward steps I've seen in my lifetime are the arrival of the web and the adoption of the euro. If it's truly incredible that you can now find the answer to pretty much any question by googling, it's also incredible that you can travel from Berlin to Lisbon to Athens and use the same currency. The feeling I get from both the internet and the eurozone is one of freedom and expansiveness. Things that used to be difficult have become easy. Things that used to be expensive have become cheap. Things that used to be separate have become unified. Things that didn't work before do now.

This year -- and this week -- we've seen some bold steps forward for the euro. Countries like Britain, Denmark and Sweden are now thinking seriously about adopting the European currency. Call it the silver lining in the cloud of 2008's great financial meltdown; nations where we eurozoners have had to queue at expensive exchanges and fumble with silly-looking local notes and coins have suddenly seen reversals in public opinion, as people saw the value of their own currencies plummeting. The time has come to say yes to euros.

This week Britain has reached a "pivotal psychological moment": a pound is now worth less than a euro at commercial currency exchanges. As The Observer reports today, "after commission and a handling fee... €18 cost The Observer £19.61, an exchange rate of €0.918 to the pound". It's entirely possible that by the end of the year the official exchange rate will see the euro worth more than the pound.

The Observer says "the Treasury last night refused to comment on sterling's fall and said there was no prospect of entering the euro in the near future. Official rates showed the pound was worth €1.11 yesterday. At its high point against the euro in May 2000, a pound was worth €1.746." However, Gordon Brown "stated in June 2003 that the best exchange rate for the UK to join the single currency would be around 73 pence per euro" -- a value reached a year ago. In 2008 the pound fell 17% against the euro. Today, 73 pence buys you 81 euro cents.

If the UK government is still officially saying no to the euro, many other governments on the fringes of the Euro-zone -- and their citizens -- are positively screaming yes. In some cases the reversals of popular feeling have been rapid and extreme. According to a new poll, 52% of Danes now support dropping the Danish krone for the euro. That's up from 45% in a survey conducted just two weeks before. The Danish prime minister has said that the financial crisis "makes it evident" that Denmark needs to join the euro. This will probably happen in 2011, after a referendum.

The Swedes have rejected euro adoption in the past, but there too opinions have shifted radically in recent months. Last week 44% of Swedes polled in favour of adopting the euro, up from 34.6% in May. Their currency, the kronor, is also plummeting, making it more expensive for Swedes to travel abroad.

Slovakia gets euros next month, Latvia may adopt the currency in 2011, and Czechoslovakia gets it in 2012. Poland should soon follow (they aim to join by 2012). Iceland is now desperate to adopt the euro -- despite not even being a member of the European Union. You can do that; the Vatican and Monaco use euros, but aren't in the EU. Norway is also outside the EU at the moment, and may be influenced by what happens in Iceland. Like the UK, Norway has had North Sea Oil to buffer it from economic hardship in the past. But that won't last forever.

For people like me, who use the euro and who'd like to use it more widely -- and who feel not just positive about the idea of a European superstate, but euro-patriotic about it -- 2008 has been a great year: the year the naysayers began to say ¥€$ to the euro.