It was twenty years ago to the day: on January 1, 2002, the French, after a little over two hundred years of using the franc, saw the first euros arrive in their wallets. And gradually adopted this new European currency, launched the same day in the 11 other member states of the euro zone.
But this transition took place in stages. The decision to adopt a common currency was formalized by the Maastricht Treaty, approved by the French in a referendum in 1992. The euro was officially born on January 1, 1999, but only immaterial, in scriptural form ( bank accounts, transfers …). It is in fact this date that we have chosen to keep in the graphs presented below. The introduction of the coins and banknotes three years later completed this transition process.
In a ViaVoice poll for Radio France, France Televisions and France Médias Monde published in early December, 69% of French people said they were opposed to leaving the euro. However, the single European currency is often the object of criticism, on the increase in prices for which it would be responsible or on its supposed harmful effect on French exports. To try to see more clearly, franceinfo takes stock in five infographics.
A euro zone of 19 countries
When the French adopted the euro in 2002, they did so along with 11 other European countries. This includes the 10 other founding countries of the euro zone with France in 1999 (Portugal, Spain, Finland, Ireland, Luxembourg, Belgium, the Netherlands, Germany, Austria and Italy), as well as Greece, which joined them in 2001.
Since then, Slovenia, Cyprus, Malta, Slovakia, Estonia, Latvia and Lithuania have successively adopted this common currency, bringing to 19 the number of member countries of the European Union using the euro. The euro zone now has 341 million inhabitants, a population slightly larger than that of the United States.
Four micro-states (Monaco, Andorra, San Marino and the Vatican) also use this European currency, with the agreement of the euro zone. Kosovo and Montenegro, for their part, adopted the euro unilaterally, that is to say without the agreement of the European Union.
Theoretically, all EU member states, except Denmark, have committed to joining the euro when they meet the criteria set to adopt the common currency. These convergence criteria concern price and exchange rate stability, the level of the deficit or the level of interest rates. Today, two countries are in the process of joining the euro: Croatia and Bulgaria could be admitted, respectively in 2023 and 2024.
But there is one major absentee: the United Kingdom, which has chosen to leave the European Union. “When the euro was launched, there was hope that the British, seeing its advantages, would decide to join it. If the United Kingdom had joined this common currency, it would have given it another dimension,” says Stéphanie Villers, economist specializing in the euro zone, interviewed by franceinfo.
The second largest currency in the world, far behind the dollar
When the euro was launched, one of the stated objectives was to make it a global benchmark currency. Twenty years later, it represents a little over 20% of foreign exchange reserves (in English), that is, monetary reserves held by central banks. The Bank of France (PDF file) emphasizes that “whatever the indicator chosen, the euro’s share amounts to plus or minus 20%: 20% of global foreign exchange reserves, 22% of the international stock of debt securities, 15% of cross-border loans and 18 % of deposits“.
These figures put the euro in second place in the world, well ahead of the pound sterling and the yen, but very far from the dollar, which still represents nearly 60% of foreign exchange reserves on a global scale. A balance of power that has not really improved in two decades.
“This inability to compete with the dollar is probably the biggest disappointment with the plan to leave this single currency.”
Stéphanie Villers, economist specializing in the euro zoneto franceinfo
The Economist note however that “The euro remains one of the youngest currencies in the world and yet it is a reference currency, which has shown that it is stable. In this respect, it has done its job rather well”.
Low inflation, despite appearances
In a recent YouGov poll for the MoneyVox site and relayed by Le Figaro, 80% of French people surveyed believe that the euro has pushed up prices and lowered their purchasing power. However, inflation figures, whether those from INSEE or the World Bank, show on the contrary that inflation has remained at very low levels since the entry into force of the euro. in 1999 and the entry into circulation of banknotes in 2002.
While it may have reached more than 13%, especially after the oil shocks of 1973 and 1979, the annual increase in prices in France has usually fluctuated between 0 and 2% since the early 2000s and has never exceeded 2%. , 81%. The 2% ceiling, which is also the historic objective set by the European Central Bank, should however be crossed in 2021, with total inflation of 3.5% according to the forecasts of the Bank of France. This increase is mainly due to the increase in energy prices (oil, gas).
But then how to understand this discrepancy between the figures and the feelings of the French? Stéphanie Villers recognizes that this is difficult to explain, but she nevertheless puts forward the hypothesis that people are much more sensitive to rising prices than to falling ones. “For example, we often forget that with globalization, many consumer products have seen their prices drop very sharply”.
Historically low interest rates for France
For several years, France has regularly borrowed at negative interest rates. This means that the country will have to repay less than what it borrowed. A similar phenomenon can be observed among our German neighbors.
But then is it thanks to the euro? In the case of France, long-term interest rates, i.e. for loans with a term of at least ten years, have effectively fallen since the entry into force of the euro. . This rate was around 4% or 5% in 1999; it is now hovering around zero. However, this decline had already started during the years preceding the arrival of the euro.
“The low interest rates for the French state are to be put to the credit of the euro, because the ECB guarantees the repayment of the debts of all members of the euro zone, so that reassures investors”, insists Stéphanie Villers. According to the latest figures available, interest rates in November amounted to 0.1% in France and -0.3% in Germany, against 0.95% in the United Kingdom or 1.5% in the United States. .
A heavily negative French trade balance
It is an aspect very often pointed out by the detractors of the euro: it would have weighed down the French trade balance. A country’s trade balance is the difference between exports, that is, the products it sells abroad, and imports, which are the foreign products sold in the country.
In France, this trade balance actually collapsed in the decade following the arrival of the euro: in 1999, the country recorded a trade surplus of 13 billion euros, while in 2008 it was in deficit of 56 billion. Since then, the trade balance has remained at this very negative level, reaching -65 billion in 2020.
Is the euro responsible for this unfavorable situation? By joining the common currency, France has effectively delegated its monetary policy to the ECB and therefore no longer has the possibility of devaluing its currency, in other words lowering its value to become more competitive.
Stéphanie Villers insists more on the role of another major event that occurred at the same time as the arrival of the euro: the entry of China into the World Trade Organization (WTO) at the end of 2001. “This is a game-changer in terms of exports, with unbeatable Chinese prices flooding the market, she specifies, and even by devaluing, France would never have been able to compete with China on low-cost products “.
According to the economist, this is not necessarily inevitable: “Germany, which therefore has the same currency as us, has very significant trade surpluses which have increased for twenty years. They have achieved this by specializing in areas with very high added value.”.