CREMONA – On January 1, 2002, we said goodbye to the Lira and discovered the Euro: 20 years later, is it right to talk about doubled prices?
The entry into the single currency represented not only an epochal passage in our history, but, to put it in the words of Carlo Azeglio Ciampi, meant having “saved Italy”.
To fully understand what effect the euro has had on Italy, it is best to first look at what it has done to other countries, especially the ones most similar to ours such as Spain and Portugal. Today, in almost all the other members of the Monetary Union, citizens are happier with it than we are (82% in Spain and Portugal, 79% in Greece even, against 72% in Italy, in the last Eurobarometer).
THE WEALTH OF ITALIANS.
Without being expressed in euro, the wealth of Italians would be worth much less, starting with real estate assets which in the old lire would not be much. Criticized at the start for speculations and inflated prices, especially in trade, considered a straitjacket by sovereignists to no longer allow competitive and repeated devaluations with which entire Italian industrial sectors have skipped the productive renewal to conquer the markets, the single European currency is celebrating its twentieth birthday and in the end it seems to have put aside any controversy. Especially in these years of pandemic that have seen the euro generate a primordial sharing of the debt of the various states, leaving room for the solidarity of the Next generation Eu and debt support.
THE EU CURRENCY.
The EU currency begins to circulate on January 1, 2002 but – preceded by the embryo of monetary union by the Ecu basket linked since 1979 to the EMS, a monetary stability mechanism with fixed exchange rates and fluctuation bands defined for national currencies – was structured and codified at the end of 1998 with the definition of the relationship with the currencies of the individual states. Against the lira, a ratio which some consider punitive for the Italian economy will be set at 1,936.27.
In any case, as expected, the time X starts at midnight on 31 December 2001 and the single currency enters the pockets of Europeans. It was born with the wishes of the president Carlo Azeglio Ciampi, who has spent most of his professional and political experience on the single currency, and of the Pope, who accompanies him to the Angelus with a special wish for peace.
In a swarm of crowds and amidst the blasts of New Year’s firecrackers, then President of the European Commission, Romano Prodi, another standard bearer of the single currency, he started it symbolically from Vienna by buying a large bouquet of roses for his wife immediately after the stroke of midnight and paying for it in euros.
The day after it will debut on the markets with an exchange rate on the dollar established at 1.16 and closing the session at 90.38 cents after a maximum of 90.63. The first countries to switch to the euro as the only means of payment – it was decided to grant two months of dual circulation to promote familiarity with the new banknotes and coins – are the Dutch at midnight on January 28, followed by the Irish on February 9. and by the French on February 17. The case of Germany is controversial. In theory, the strict Germans would have liked to get rid of their beloved mark in a single night, that of New Year’s, avoiding any period of double circulation with the euro, an impossible mission.
The lira ends its legal tender on 28 February but already from the first week of January, contradicting the gloomy expectations of critics, 95% of European purchases are made in euros..
THE ACHILLA HEEL.
Then a more or less smooth navigation until 2008 when the global financial crisis threatens the single currency from its foundations: the lack of a common government of the Union immediately appears to be its Achilles heel on which speculation begins to focus, first bringing the sovereign debt of Greece to its knees in 2010, then aiming at the heart of the system, the debts of the ‘Piigs’, Portugal, Ireland, Spain, as well as Athens and above all Italy, the biggest bite. The race of the Italian spread begins with respect to the very solid German Bunds throughout 2011. Up to the letter from the ECB in August which calls on Rome to implement some measures. The spread rises to touch 574 points on November 9, when at the head of the government is Silvio Berlusconi. The government crisis follows with the arrival of Monti to secure the Italian accounts. But the definitive and peremptory bailout of the euro came on July 26, 2012, with the famous phrase “whatever it takes to preserve euro”, pronounced in London by the president of the ECB, Mario Draghi, who succeeded Trichet in the previous November with the markets in full panic.
Since speculation slows down until it returns and leaves room for a debate between hawks and doves on how to manage debt in the Eurozone, in practice the enormous mass of Italian public debt, purchased by the ECB generously in recent years. Then the pandemic calls everything into question and public debts from all over the world and from European countries in particular, forced to finance expensive lockdowns and production stoppages, shoot up like fireworks.
The euro thus becomes the anchor, no longer the ballast for many Europeans, even the most frugal. Now the shadows of inflation are cast on the single currency, which after years of undercurrent and in any case below the 2% set as a monetary policy objective in Frankfurt, is now navigating well above the threshold defined as psychologically relevant, especially for Germany.
From the Eurotower they ensure that these are transitory world rises, from the Fed they are no longer convinced and the European hawks begin to fly back in defense of a euro that does not forget too much the legacy of the mark and returns to look north).
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