Opinion: Has the Euro Changed Anything? | Business| Economy and finance news from a German perspective | DW | 23.12.2004
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Opinion: Has the Euro Changed Anything?

Many Germans still calculate prices in marks and those who have less money in their wallets than three years ago -- when the new currency was introduced -- wonder whether the euro is to blame.


The single currency was introduced in 12 countries in 2002

It was harder for the Germans to say goodbye to the deutsche mark three years ago than it was for other Europeans to take leave of their national currencies. The difficulty of letting go was largely the result of the D-mark's success story. The first D-mark bills printed for the currency reform caused an immensely dynamic boom in postwar Germany. The currency reform, the deutsche mark and the so-called "economic miracle" in the 1950s and '60s are inextricably linked to each other in the minds of the Germans.

In the beginning, Germany profited from the fact that other countries viewed the deutsche mark with distrust and that it was chronically undervalued for years. That helped the German economy achieve huge success in exports and led to full employment and a labor shortage that resulted in recruiting guest workers from Greece, Portugal, Turkey and other southern European countries -- practically inconceivable today.

Legendary stability

And for 50 years the deutsche mark survived many a storm, including the oil price shocks during the 1970s and the two-digit salary increases demanded by trade unions that wanted to ensure workers profited as much as possible from the new prosperity. Things like that are hard on any currency.

DM-Scheine und Euro

Deutsche marks (left)

Still, the German central bank always managed to maintain the currency's stability and to stem inflation. Thanks to the Bundesbank's constitutional independence -- a model for the European Central Bank -- it not only kept the mark stable but also turned it into a leading currency that, along with the dollar, was recognized worldwide

The Germans weren't proud of their black-red-gold flag or the eagle in their national emblem, but they were proud of the mark. Many other Europeans found it easier to give up their national currency for the euro possibly because they secretly hoped to inherit some of the D-mark's legendary stability.

And since euro cash was introduced into circulation on Jan. 1, 2002, the currency has remained surprisingly stable. The euro has neither made cars nor washing machines more expensive -- at the most it's effected food, drink and some services.

Due to the current weakness of the dollar, Europeans are much less effected than people in other parts of the world by the exorbitant price hikes for crude oil, steel and other raw materials. And they can enjoy much cheaper holidays in countries using the US dollar or that tie their currencies to the dollar -- though this has less to do with the strong euros than with the weak dollar.

Spurring reliability

All in all, Germans consider the mark history, and they do just fine with the euro.

Autofabrik (AUDI)

An Audi assembly line in Györ, Hungary

With one exception. German companies used to be obliged to justify their high world market prices -- caused by the highly valued D-mark and high wages -- through innovation, efficiency, quality and reliability. They called the strong deutsche mark an "innovation whip."

Today European firms are in a similar situation with the strong euro and the comparatively high level of European incomes. But instead of focusing on innovation, quality and efficiency they seem to have shifted the rat race to wages, working hours and working conditions

More and more Germans are expected to work longer hours for less money to preserve their jobs. At the same time, it seems apparent that Western Europe cannot win against the low wages and weak currencies of the competition from Eastern Europe or Asia.

The strong euro can't be blamed for this futile race. Rather, what's needed is innovation and quality -- like in the old days of the strong D-mark

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