Spain — The Spanish peseta was replaced by the Euro in at an exchange rate of The introduction of the Euro created a lot of changes in the landscape of European currency and monetary policy with many of these currencies being completely replaced by the Euro. The differences in exchange rates and currency valuations really highlights the differential wealth between the countries of the European Union, and those differences can still be felt today as countries try to navigate political tensions in a fragile geopolitical union.
Your email address will not be published. All rights reserved. Sign in Register. Our Company. EDU Blog. My cart 0. What are the Currencies that got Replaced by the Euro? Portugal Escudos Pb Source: Banknote World Slovakia — Slovakia adopted the euro in , opting out of the Slovak koruna as its national currency. Conclusion The introduction of the Euro created a lot of changes in the landscape of European currency and monetary policy with many of these currencies being completely replaced by the Euro.
Sources Source 1 Source 2 Source 3 Source 4. Leave a Reply Cancel reply Your email address will not be published. Join Our Newsletter. Can't subscribe you right now. In , Italy ceased to be a collection of individual states and became the unified Kingdom of Italy to To counter the various currencies in use at the time across Italy, the lira was introduced and became the official currency of the newly unified state.
The lira was affected by inflation in the Italian economy from the s until the country formally adopted the euro in , at which point the production of lire banknotes and coins was halted in preparation for the release of euro-denominated notes and coins on 1 January During this time, the lira was exchangeable at a fixed conversion rate of Learn about the most traded currencies on the forex market.
The Spanish peseta was the pre-euro currency of Spain from until The peseta was divided into subunits of centimos, with centimos being equal to one peseta.
However, following the death of Spanish leader Francisco Franco in , inflation began to climb in the Spanish economy. It got to such a point in the late s and early s, that the centimo was withdrawn from circulation in as it had become practically worthless. After this time, frequently used peseta banknotes included the , and denominations. The Spanish peseta was used alongside the euro from until , with the peseta no longer being accepted as legal tender after February Unlike some other currencies on this list, the peseta will be exchangeable with the euro at a fixed rate of The Netherlands used the Dutch guilder gulden as its official currency from around until The currency was decimalised in with one guilder being comprised of cents.
Unlike some of the other old European currencies on this list, which circulated alongside the euro, the guilder stopped being legal tender on 28 January — a full month before currencies such as the Spanish peseta and the Austrian schilling.
The guilder was converted to the euro at a rate of 2. The Belgian franc was the currency of the Kingdom of Belgium from when the country secured its independence in , until the implementation of the euro in The Belgian franc was subdivided into units of , referred to as centiemen in Dutch.
In the 60 or so years before Belgium started using the euro, the franc was devalued on several occasions, first in , and then in , and finally in During this time, the Belgian franc also traded at par with the Luxembourgish franc, and each was legal tender in the other country. Just like other countries on this list, the Belgian franc was used alongside the euro for three years from , and it ceased being legal tender in February The Banque Nationale de Belgique National Central Bank of Belgium will continue to exchange Belgian franc banknotes indefinitely, although it stopped exchanging coins in December The Austrian schilling was the pre-euro currency used by Austria between and , and then again from until After Germany annexed Austria in , the German Reichsmark replaced the schilling at a rate of two Reichsmarks to three schillings.
The Austrian schilling was divided into subunits called groschen, with groschen making a schilling. Austria formally adopted the euro in , though the schilling was still used alongside the euro until After , the currency became widely known as the Irish pound, although it was pegged to the British pound at parity.
This meant that the currencies fluctuated against each other according to open market conditions. When the euro was adopted by Ireland, the exchange rate between Irish pounds and the euro was 0. The Finnish markka was the official currency of Finland from until The subunit of the markka was called the penni, with pennies making a markka. Finland was one of the first countries to enter the eurozone, with the euro being used alongside the markka until After the introduction of euro coins and banknotes on 1 January , the markka continued to be accepted as legal tender until 28 February However, markka coins and notes were still exchangeable with euros at the Suomen Pankki National Bank of Finland until , at a fixed rate of 5.
The Portuguese escudo was the currency of Portugal from until The escudo replaced the real at a rate of real to one escudo following a Republican revolution which took place in That makes prices transparent and increases the competition between firms in countries using the euro. Labor and goods can flow more easily across borders to where they are needed, making the whole union work more efficiently.
The euro also supports cross-border investments within the eurozone. Investors in countries using foreign currencies face significant foreign exchange risk , which can lead to an inefficient allocation of capital.
Although stocks also have exchange rate risks, the impact on bonds is far greater because of their lower volatility. The prices of most debt instruments are so stable that exchange rates influence returns far more than interest rates or credit quality. As a result, foreign currency bonds have a poor risk-return profile for most investors. Before the euro, successful companies in countries with weak currencies still had to pay high interest rates.
On the other hand, less efficient firms in nations with stable currencies enjoyed relatively low interest rates. The primary risk in lending across borders was the currency risk, instead of default risk. With the euro, investors in low interest rate countries, such as Germany and the Netherlands, were able to lend money to firms in other eurozone countries without currency risk.
In theory, the euro should help countries that adopt it to support each other during a crisis. The currencies of countries with larger economies tend to be more stable because they can spread risk more effectively.
For example, even a prosperous small Caribbean country can be devastated by a hurricane. On the other hand, the U. As a result, the U. The global crisis tested mutual support within the eurozone in Initially, there was not enough collective action. Even worse, many nations closed their borders to each other.
However, the European Central Bank consistently bought up enough debt in afflicted countries, especially Italy, to keep interest rates relatively low. More importantly, France and Germany supported a recovery fund worth over billion euros.
By far, the largest drawback of the euro is a single monetary policy that often does not fit local economic conditions. It is common for parts of the EU to be prospering, with high growth and low unemployment.
In contrast, others suffer from prolonged economic downturns and high unemployment. The classic Keynesian solutions for these problems are entirely different.
The high growth country ought to have high interest rates to prevent inflation, overheating, and an eventual economic crash.
The low growth country should lower interest rates to stimulate borrowing. In theory, countries with high unemployment do not need to worry much about inflation because of the availability of the unemployed to produce more goods.
Unfortunately, interest rates cannot be simultaneously raised in the high growth country and lowered in the low growth country when they have a single currency like the euro. In fact, the euro caused precisely the opposite of standard economic policy to be implemented during the European sovereign debt crisis. As growth slowed and unemployment increased in countries like Italy and Greece, investors feared for their solvency, driving up interest rates.
Typically, there would be no solvency fears for governments under a fiat money regime because the national government could order the central bank to print more money.
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