With the start of the new year in 2002, the 12 members of the European Union launched a single currency across their borders, replacing individual country currencies and singling out the Euro as their one shared monetary denomination. Marketplace, a daily economics news program heard on National Public Radio, featured a story on January 2, 2002 about the currency change of the landmark event.
Why is this change so important? How will having a single currency influence consumer behavior in the European Union? Why did the countries that declined making the change do so? In this lesson you will explore these questions to determine what you would do if you were a member of the European Union.
In this lesson you will calculate currency exchanges for various currencies including U.S. Dollars, Deutschmarks, and Euros. Describe the advantages and disadvantages of using a single currency within a group of several countries. Determine how economic exchange rates influence consumer behavior. Lastly, explain why some European countries, including Great Britain, declined to switch to the standard Euro currency.
Discuss trips you or your classmates have taken to destinations outside the United States.
- Where did you go?
- What were the best parts of the trip?
- What were the challenges?
- Did you go to a country where people spoke a language other than English?
- How did you manage to get the goods and services you needed?
- Did you have the opportunity to make any purchases while in the other country?
- What did you buy?
- How did you know how much you were spending?
- Did you or anyone in your class travel to more than one country on your trip?
- What happened when you switched from one country to another?
[NOTE : If you have not had the opportunity to travel abroad, look at the pre-Euro currencies of various countries. Take some time to explore currency sites you can find. Challenge yourself to find samples of the different types of currency found in European countries before the changeover to the Euro. you can use the National Geographic Xpeditions Atlas
to print out a map of Europe and list the appropriate currency with each country. Once you have had a chance to see the wide variety of currencies, redirect the discussion to what would happen if you traveled from one country to another in Europe and needed to purchase goods or services in each different country.]
This lesson will focus on the introduction of the Euro as the single currency among 12 independent nations, all members of the European Union.
Now read the Marketplace article on the Euro to learn about the introduction of the Euro in the economies of these twelve countries:
- What difficulties did some countries experience during this transitional period?
- Why would it be difficult to switch from one currency to another?
- Would you have used the Irish method of accepting only the new currency or would you have tried to use both monetary values as happened in Germany?
Now work independently or in a small group. Read some of the news articles of the time that describe the transition to the Euro. Specific items you should look for include the following:
What are the denominations of the new currency?
- What does the new currency look like?
- How is it similar to or different from the previous currencies of each participating nation?
- What issues arose during the development of the changeover plan that had to be addressed?
- In the (now) follow-up lesson: "The Euro Makes its Debut", you can take a more in-depth look at fiscal policy and the economic and political issues countries had to resolve before they would be ready for the changeover.
- Which countries chose not to change over to the Euro?
- Why did they choose not to make the change?
- Has this stance changed over time?
- What were some of the the costs and benefits of the switch? Use the Costs and Benefits article to find specific examples of the ways businesses and individuals were affected by the switch. - both costs and benefits. Make notes on these so that you can participate in group discussion during the evaluation and closure activity below.
Visit the financial currency calculator and make some calculations as to what your money would be worth in a variety of European currencies (Deutschmarks, Lira, Francs, Dutch Guilders, etc.)
- How much would $20 be "worth" in the various countries?
- How could having one single currency make trade between countries easier?
- Suppose you took a trip to Europe just before the currency switch. You plan to visit Germany, France, and Italy. You have $200 to spend on souvenirs while you are there, but you’ll have to exchange your U.S. Dollars for each country’s currency while you are traveling. Complete the following problem sets to see what you can buy, and how much money you’ll have when you return.
Interactive Activity: European Shopping Adventure
In this lesson you studied the changeover from multiple currencies to a single one.What are the advantages, from a consumer perspective, in having the single currency? What are you able to do more easily having only one denomination? Do you think this will influence people's spending habits? What about trade between countries and with other countries outside the European Union?
Pretend that you represent one of the countries that did not change to use of the Euro in January 2002. Present an argument to the people of your country as to why you should now make the change, or why you should remain steadfast in your resolve not to join the other countries in the EMU. Include references to influences such as tourism, international trade, political sentiment, domestic financial issues, etc.
If you have not had the opportunity to travel abroad, look at the pre-Euro currencies of various countries. Take some time to explore currency sites you can find using sites such as the Paper Money Virtual Gallery, available through the International Bank Note Society . Challenge yourself to find samples of the different types of currency found in European countries before the changeover to the Euro. you can use the National Geographic Xpeditions Atlas to print out a map of Europe and list the appropriate currency with each country. Once you have had a chance to see the wide variety of currencies, redirect the discussion to what would happen if you traveled from one country to another in Europe and needed to purchase goods or services in each different country.