In the realm of that which is monetary, the first 20 years of the 21st Century are drawing to a close in the same way that the 20th Century began: with a true revolution from increasing internationalization, economies of which the (sometimes unexpected) effects have not yet fully become apparent, both on a country level and for the world as a whole. Indeed, the beginnings of the advent of the euro have had consequences that are as significant as those caused by the upheavals linked to the abandonment of the gold standard after World War I.

Currency has always been a controversial subject. One of the most well-known debates over the influence of currency on the economy is the response of English economist Stuart Mill at the end of the 19th Century to mercantilists who believed the possession of money to be a sign of wealth: “There cannot, in short, be intrinsically a more insignificant thing, in the economy of society, than money”¹.

Although there is a general consensus on how banks create currency and that central banks should be responsible for managing monetary policy, many issues still give rise to heated discussions among both economists and citizens: what is money? What does it do? How can we analyze the impact of variations in its amount in circulation on the real economy? Are modifications of the latter not a source of fluctuation in the quantity of currency? What status should central banks be granted? Should regulation be confined to the national level or extended to a larger area or even to the whole world? What tools are needed to ensure that monetary policy is as effective as possible? How do economic agents respond to monetary policy decisions?

All these questions become increasingly significant when considering the creation of a new currency ex nihilo (the case for the euro) in a little-known economic environment (characterized not only by a sharp slowdown in price increases, particularly low growth and high unemployment, but also by negative interest rates). Indeed, an analysis of the mechanisms put in place by public authorities to remedy the observed economic dysfunctions often generates irreconcilable opposition from those who do not believe in the effectiveness of monetary and economic policies and, even more crucially, those who have no confidence in elected or appointed officials to improve the situation of the people and thus, ultimately, democracy.

The creation of a single European currency is undoubtedly one of the most ambitious (but also one of the most controversial) objectives of European integration. And the achieved results are not making things any better!

After two decades of being used by 340 million inhabitants (out of the 508 million inhabitants of the European Union), it would be interesting to take stock of this new currency, the euro, and its use both for households and for businesses and States, by examining the reasons for its substitution to national currencies, the extent of its use, the methods for controlling its quantity, the effects of its implementation, etc.

In this book, we aim to present the bases for understanding these questions, of which the answers are essential to every citizen since money is one of the most widely used commodities in our daily lives. We will therefore address multiple aspects: historical, institutional, analytical, theoretical, empirical, technical, factual, etc. This book is intended to be as exhaustive as possible, but also as non-technical as possible, in order to facilitate the reader’s understanding of the many economic problems from our time. By taking an interest in how money is used, we are able to consider the big picture of economic life. Money is indeed at the center of trade relations between people. As such, in an area where there is little knowledge and no absolute truth, we hope to make our modest contribution so that the reader can form his or her own opinion on the role and consequences of introducing this new currency.

Paul-Jacques LEHMANN

December 2018