Transcription
Last January 1st, Bulgaria officially adopted the euro, becoming the 21st country in the eurozone. The map of the euro that we are used to seeing is this one. But what if I told you that its geography is actually much vaster, much more complex, and that it extends far beyond the borders of the European Union? This week, we will build the true map of the euro together. And I don't want to spoil it for you, but counting all possible scenarios, we arrive at a total of about sixty countries and territories that use it, making it a global currency and one of the most used in the world. So, what is the true geography of the euro? Welcome to this new map plan. This week, we are mapping a currency that is much more global than you thought. The euro is not just a currency; it is a geographical arrangement, a reflection of history and geopolitics, and above all, it is a fascinating economic case study. Our journey into the geography of the euro, I propose we start at the beginning, with the most obvious: the eurozone. The club of full members is called the eurozone. We know this one well, and it has only grown since its creation on January 1st, 1999. On that date, the eurozone was formed by 11 countries, which are its founding members in a way, and which are almost all located in Western Europe, except for Finland. The zone then expanded, but little by little. So, I'll speed it up a bit for you. It looks like this: Greece in 2001, Slovenia in 2007, Cyprus and Malta in 2008, Slovakia in 2009, Estonia in 2011, Lithuania in 2015, Croatia in 2023, and finally Bulgaria, the latest, just a few months ago. This is the geography we know. A spatially very concentrated group that chose to adopt a common currency. But once we know that, an essential question remains: why? What is the point of adopting a single currency? When I have a question like this, what I like to do is find someone very serious to give me answers. So, I went to the Bank of France and had a long discussion with Deputy Governor Agnès Benassi Keré. The single European currency was designed as a complement to the single market because having multiple currencies in an economically integrated zone introduces uncertainties in planning and also costs for exchanging currencies among themselves. So, this goes against the free movement of goods and capital within the European Union. To share a currency among several countries and for it to be a real advantage, there must be spatial and economic proximity. You have to, in a way, vibrate at the same rhythm. It is obvious that France could not have formed a monetary union with, I don't know, Argentina, which is on the other side of the world, and so the gains in terms of integration would be too small compared to the loss in terms of independence of monetary policy. Proponents of the euro at its creation believed that having a common currency would accelerate the convergence of European economies. Almost 30 years later, it must be acknowledged that very strong divergences still persist. The euro is therefore a very geographical currency that has spread around its birthplace. So, we have our first map, the most obvious one, but it's only the beginning of our journey into the geography of the euro. The act of partially or totally replacing one's own currency with the euro without being part of the eurozone is called "euroization." So, we must distinguish between partial euroization and complete euroization. Complete euroization is simply using the euro instead of the national currency. So, the euro replaces the national currency. And to locate this complete euroization, you don't need to look far; you need to get out your binoculars. There are indeed four small territories in Europe that use the euro without being part of the European Union, thanks to specific agreements. So, we need to add them to our map. These are the microstates of Monaco in France, San Marino and Vatican City in Italy, and Andorra. Strong historical and geographical ties with their eurozone neighbors led them to use it with Europe's agreement. The four small states have an agreement with the ECB, so no problem. They can even mint coins. They cannot print banknotes. By minting their own coins with their national emblems, these territories obtain a form of honorary autonomy without having a say in the euro's monetary policy. They are spectators, not actors. This is called bilateral euroization. But there are other territories in Europe that use the euro without having any agreement with the European Union. While the four territories we saw before adopted the euro following an agreement, there are two that chose to adopt the euro without asking anyone. In this case, we speak of unilateral euroization. They are, in a way, the little tricksters of the euro. They chose to use it on their own. Big tricksters, little tricksters. Alright, let's add them to our map. To locate them, you have to look towards the Balkans, towards Kosovo and Montenegro. These two countries adopted the euro on their own initiative. But why do that? Well, it's a bit of a special case because before the transition to the euro, they already had the Deutschmark as their currency. So, once the Deutschmark was replaced by the euro, they simply followed. Euroization occurred without an agreement with the ECB, through a simple exchange of banknotes. The advantage is clear: to benefit from the stability and credibility of the euro. The disadvantage is that these countries have no say in the euro's policy. They are subject to decisions without participating in them. They are, in a way, on the euro bus, but they are not driving. So, if we take a little cartographic checkpoint, we have the 21 countries of the eurozone, to which we must add our four bilaterally euroized territories and the two that are unilaterally euroized. In total, that makes 27 countries and territories that use the euro. We are moving forward. But the euro also extends far beyond the borders of the European Union, and there's no choice; we'll have to zoom out a bit. The euro exists widely outside of Europe. It is even present on all continents. And to realize this, we need to take a step back. First, the euro is present in all European territories called ultra-peripheral, meaning overseas territories that are directly part of the national territory. This concerns nine territories in total, and the majority belong to France. The euro is the currency of overseas departments like Martinique, Guadeloupe, or Reunion, exactly like our metropolitan departments. The euro circulates in our five overseas departments, but also in the collectivity of Saint-Martin in the Caribbean, and it is also present in the two Portuguese territories of the Azores and Madeira, as well as in the Spanish Canary Islands. A list to which we should also add Saint Pierre and Miquelon, even if it is not strictly speaking an ultra-peripheral European territory. So, in the case of Saint Pierre and Miquelon, there is a European agreement that allows them to use the euro, which means they cannot mint coins or print banknotes, but they can use the euro. So, this applies to Saint Pierre and Miquelon, it applies to the Azores or Madeira, albeit somewhat anecdotally, but also outside the European Union's borders, the two British military bases of Akrotiri and Dhekelia, located on the island of Cyprus, use the euro, even though they are enclaves of the United Kingdom, which is neither in the European Union nor in the eurozone. Let's go back to our map and add all these new territories: the seven French ones, the two Portuguese ones, as well as the Canaries. That's 10 more territories, bringing our total to 37 countries or territories that use the euro. 39 if I count the two English bases in Cyprus. But you will see that's not all. But that's not all. But that's not all. Because there is a last category of countries that use the euro somewhat indirectly. These are countries where the euro does not circulate daily, but whose currency is intimately linked to Europe. It does not circulate, but its influence is omnipresent. Again, this is a direct consequence of history, as these are former European colonies, and again, it is very, very French. The currencies in question are the CFA franc, whether it's the Central African or West African one, the Pacific franc, the Comorian franc, as well as the Dobra of São Tomé and Príncipe, and the Escudo of Cape Verde. For all these currencies, we speak of monetary anchoring. This means that the exchange rate of the currency is fixed or partially fixed relative to the euro. Without using the euro in daily life or in business, some countries use the euro as an anchor for their own currency. So, they keep their currency, and transactions take place in their currency. It just so happens that the exchange rate of their currency is fixed, so totally fixed, partially fixed. There are many variations relative to the euro, you know. What do you say? Why do that? Excellent question. Well, I will answer it. The main advantage is to benefit from the stability of the euro again, particularly to provide some credibility to these countries' fight against inflation. They are in countries where the central bank does not necessarily have great anti-inflationary credibility. This assumes, for example, that there are reliable statistics on inflation. If the population does not believe the price index, you see that while the exchange rate is something that is observed every day in the newspaper or on the markets. And so, it is a signal that is often used in fact during disinflation phases to, well, legitimize the fight against inflation. And finally, there are also countries that have pegged their currency to several different currencies. For example, this is the case of Morocco, which has pegged its dirham 60% to the euro and 40% to the dollar since 2015. Why? Because Morocco's trading partners are the eurozone, but also the United States. So, these are countries that consider it more advantageous for them to have a basket with two currencies rather than just one. Because if you fix your exchange rate against the euro, you inherit volatility against the dollar that is the same as that of the euro against the dollar. Obviously, if we take our euro map again, we have to add a good bunch of countries and territories to it. 14 for the CFA franc, 3 for the Pacific franc, not forgetting the Escudo, São Tomé and Príncipe, and Cape Verde. That's 20 new countries or territories, bringing our total to 59. I did tell you there were about sixty, and even then, I'm not counting countries that have pegged to a mix of euros or other currencies, nor Denmark, which has been outside the eurozone from the start but has had a fixed exchange rate between its krone and the euro until today. So, we have our final map of countries and territories that use the euro in 2026. Ultimately, the natural expansion zone of the euro is Central Europe. Africa is rather under the influence of China and the United States, and Latin America under that of the United States and the dollar. To complete the picture, we should also mention all the territories that are part of the European Union but do not use the euro, either because they refuse it or because they do not yet meet all the conditions to join. And then, finally, there are what we could call fiduciary terrae incognitae. These are territories that theoretically are part of the euro but where money does not circulate. These are the TAFFs, the French Southern and Antarctic Lands. So, exchange in general, and monetary exchange in particular, is a human activity, and therefore, humans are needed to carry out these exchanges, and the TAFFs are devoid of permanent human presence, so the monetary question does not arise. No humans, no trade, no trade, no money, no palaces, no palaces. That's it for this journey into the geography of the euro. 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