Before Euro existed, each European country has it’s own currency (French Franc, German Mark, Austrian Schilling, Italian Lira, Spanish Peseta, Portuguese Escudo, Irish Pound, Dutch Guilder, Finnish Markka, etc.). meaning even by crossing the border one has to constantly swap currencies plus inflation. Is that why Euro was created?
Is it because for example, was the German Mark a weak or strong currency? Germany among others adopted Euro in 2002 replacing their own currency. Prior to the adoption of Euro, is it a headache for travelers to swap currencies a lot since each country has it’s own with varying values (volatile whether you’ll end up getting more or losing money).
However there are still EU states that haven’t adopted it today: Poland, Czech Republic, Hungary, Sweden, Romania, not mentioning Denmark (since they opted out) with new states who adopted it recently, that being both Croatia & Bulgaria. It’s weird since despite Bulgaria adopting it, there’s parallel pricing at stores: in Lev and Euro.
Since it wasn’t mentioned before, I’ll write a bit about credit, debt and inflation.
Soooo, you may have heard that in the really olden days, currency was backed by valuable metals. Up to the end of Brendan Woods, you could take a US dollar and go to some exchange place and demand and receive a US dollar’s worth of gold.
That was a problem.
If anyone, even nations, needed a bunch of money very quickly, they couldn’t get it easily, because they would need to either give something of equal value, or take on credit, which people wouldn’t give them, because they were already in a financially bad place.
So that “backing” (with gold) was removed. Currency now solely rests on a general “trust” in the country and the economy. And so when things got tight in the Weimarer republic, they just printed money and that’s how we got the word “hyperinflation” https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic . The situation was solved by resetting the currency. Besides the trouble of the actual printing, it’s a huge mess because everything has to be reevaluated, prices are weird and wonky, making people less interested to trade (and pay people in the country for their goods and services).
Buuuuuut, if it’s done carefully, a little bit of inflation can actually be good for a domestic economy: Since old debt is just a number, if the value of the currency gets lessened, that old debt is easier to pay back. Improved exchange rates make goods and services from that country cheaper and more competitive and ideally that can promote international trade.
The Euro removes both.
It does that by sort of, kind of coupling economies and using trust in some parts of the European economy to serve as back for the rest that is struggling.
Which means when greece had a debt crisis (in 2010 or so), they couldn’t just debase their currency and call it done, it was a huge international problem.
It’s the reason why countries that are rather on the “let’s take on more debt, lol” side of economic planning, often back plans for “euro bonds” that create shared responsibility between european nations for the debt any nation takes on.
In practice, the biggest reason is probably still that trading and managing international companies become a lot easier if things don’t have to be converted all the time.