In February 2002, the euro became the sole currency of 12 European Union (EU) member states, replacing the French franc, the German mark, the Italian lira, the Spanish peseta amongst others. The European Monetary System (EMS) is a complex convertibility agreement between these currencies. It’s also one of the most ambitious monetary experiments in human history. 20 years after this landmark moment, what’s the state of the common currency’s balance sheet?

It was a slow burner

The concept of a common European currency can be traced back to 1929, when German statesman Gustav Stresemann urged the League of Nations (the United Nations’ predecessor) to adopt one. It took until the 1970s for any serious discussion of potential implementation to pick up, with the European Economic Community (EEC,  forerunner to the EU) even overseeing some monetary cooperation between its various central banks. 

After the fall of the Berlin Wall in 1989, the French agreed to drop their opposition to German reunification in exchange for German support for the euro. In 1992, the member-states ratified the Maastricht treaty and the subsequent introduction of a single currency. Not everyone had been a fan of the idea. In a piece for Project Syndicate in 1997, Chicago School guru and Nobel laureate Milton Friedman warned that the eurozone was not an “optimum currency area”. In the 1980’s, a brilliant young …