Euro cash turns 20!
At first the euro was mistrusted, with many calling it the “teuro” (“expensive euro”). Around 20 years ago, 70% of the participants in a survey by the Institut für Demoskopie responded that they had “little or no trust” in the euro, which had been introduced in cash form a few months previously. On 1 January 2002, the new currency replaced the banknotes and coins previously used in 12 European countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. In Germany, the euro replaced the D-Mark. Three years earlier, the exchange rates among eleven of these twelve national curren-cies had already been irrevocably fixed. However, the euro was initially used only as a settle-ment currency for electronic payments.
“A short New Year’s Eve”
The introduction of euro cash was a colossal undertaking, requiring a total of around 15 billion banknotes with a value of €630 billion and over 51 billion coins worth €16 billion to be pro-duced by the end of 2001. As the national central bank, the Bundesbank was responsible for the swift and smooth introduction of the new euro banknotes and coins in Germany. All of the cash in circulation had to be exchanged within a very short space of time. In September 2001, the Bundesbank already began providing banks with euro cash in advance of the euro’s official launch. This frontloading was necessary to ensure that all banks had sufficient euro cash for the first few days following the launch. On the day of the changeover, people across Germany exchanged D-Mark for euro cash at the Bundesbank’s branches. The exchange rate was €1 = DM 1.95583. Up to 28 February 2002, it was possible to make cash payments in either D-Mark or euro in Germany.
Andreas Marek, Head of Cash at the Bundesbank’s Leipzig Branch, recalling “E-Day”, the day euro cash was introduced.
Do you still have a starter kit at home?
The launch of the euro posed challenges for the central bank not only logistically but also in terms of communication. In this case, the Bundesbank enlisted the assistance of TV presenter Günther Jauch. Under the slogan “Don't let sleeping coins lie!”, he featured in adverts that ap-peared millions of times over on TV, the radio and in newspapers, calling on the public to ex-change their cash at the Bundesbank. The aim of this media campaign was to encourage as many people as possible to exchange their D-Mark coins at an early stage. Thanks in part to this campaign, 11.6 billion D-Mark coins had been brought to the Bundesbank by the end of 2001. Moreover, the “Euro tent tour” was launched in Berlin in April 2001, visiting 100 German towns and cities to inform the public about the new currency. The Bundesbank also held infor-mation events on the euro’s launch in schools and other locations.
Preparations also included the starter kits issued from 17 December 2001 onwards to familiar-ise the public with the new currency ahead of its launch. These were small packets containing 20 coins with a value of €10.23.
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The euro: A success story
In the years that followed, seven more countries joined the euro: Slovenia (2007), Malta and Cyprus (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015).
20 years on from its launch, the euro is the currency shared by 19 EU countries and over 340 million Europeans. Most support the single currency: a survey in summer 2021 (Eurobarometer No 95, 2021) found that 79% of euro area citizens are in favour of the euro. In Germany, this figure is even higher, at 82%. This is due, not least, to the fact that prices have been stable since the introduction of the euro. The average inflation rate over that period has been 1.4% in Germany and 1.6% in the euro area as a whole. The Governing Council considers that price stability is best maintained by aiming for a 2% inflation target over the medium term. The refer-ence to “the medium term” makes it clear that temporary positive and negative deviations from this target are unavoidable. In the short term, inflation is often influenced by one-off effects. For example, high energy prices, the reversal of the temporary VAT cut in Germany and global supply bottlenecks have led to a sharp rise in inflation over the course of 2021.