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Will All EU Member States Eventually Use the Euro?
On 1 January 2011, Estonia will become the 17th country to officially adopt the Euro as its currency.
Introduced in 1999, and brought into general circulation in 2002, the Euro is now the currency of 329m EU citizens. Now over a decade since its inception there are still ten member states that have not adopted the currency. As EU enlargement progresses, will all EU states eventually employ the Euro as envisioned? With high profile states remaining outside the Eurozone and a freefalling world economy, that assumption is on shaky ground.
The single currency is a physical representation of the ideal of closer economic cooperation among member states. For citizens, it is also the most visible symbol of the ideals of a shared European identity and common values.
The most important point in the debate over whether all EU member states will adopt the Euro is that they are obliged to.
Every EU member state is part of the Economic and Monetary Union. This union, by its very nature, involves close economic cooperation among the member states.
The idea of monetary union stretches back as far as the 1957 creation of what is now the European Union and its central idea of a “common market”.
However, the ground rules for the creation of a single currency for the Union were only laid down in the Maastricht Treaty (Treaty on European Union) in 1992.
Under the Maastricht Treaty, all EU member states must join the Euro once they have met the requirements stipulated. These conditions, known as convergence criteria, include low, stable inflation rates, exchange rate stability and stable public finances. However, there are currently two high profile exceptions to this: the United Kingdom and Denmark.
They have obtained "opt-outs" which mean they are not required to join the Euro even if they meet the convergence criteria. In both countries, the reasons for not replacing their national currencies with the Euro are related to economic and political sovereignty.
In the case of Denmark, their “opt-out” was obtained as one of several concessions as a result of the Danish people rejecting the Maastricht Treaty in a referendum.
The referendum was passed on the second occasion after a guarantee was given that Denmark would not be forced to replace the krone with the euro. In 2000, the opportunity to join the Eurozone was again put to the Danish people and was rejected.
Of the 10 member states that have yet to join the Eurozone, most are from the eastern states that acceded to the European Union in 2004. As their economies gradually meet the stringent conditions set down by the EU, these states will join. Slovenia has already joined, adopting the Euro as its currency on 1 January 2007.
The Euro is an expression of a commitment to European integration, values and shared identity. The opt-out scenario of the UK and Denmark may call this into question and raise doubts about the fundamental commitment of all EU nations to the European project.
If the UK and Denmark were willing to join the Eurozone, they would no doubt be welcomed with open arms. The uncertainty surrounding the viability of the currency in the midst of the global economic crisis ensures that, for now at least, the Euro needs the UK and Denmark more than they need the Euro.
While accession countries seem to be showing eagerness for the Euro, it seems for the time being that Denmark and the UK will remain on the outside looking on.
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