The Birth Of The Euro

In Europe, the idea of fixed exchange rates had by no means died. The European Economic Community introduced a new system of fixed exchange rates in July 1978, the European Monetary System. Like all of the previous agreements, it failed in 1993. With the 1991 signing of The Maastricht treaty the quest continued in Europe for a stable currency independent of the US $. It was agreed to not only fix exchange rates but also actually replace many of them with the Euro in 2002.Today, Europe has embraced the Euro in 12 participating countries. The physical introduction of the Euro on January 1, 2002 saw the old countries currencies made obsolete on July 1, 2002.In Asia too, the lack of sustainability of fixed foreign exchange rates has gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable.