Translated by Jennifer Di Giacomo
In the European landscape, few creations have been as ambitious and debated as the euro.
Formally born in 1999, as a scriptural currency became physical in 2002, that currency celebrates a quarter century this year. The euro is now the currency of 350 million Europeans in 20 member states. Its currency influence extends to 60 territories, involving about 6.5% of the world's population and constituting 20.1% of global foreign exchange reserves, second only to the U.S. dollar.
Behind these impressive numbers, lies a complex history of undeniable successes and deep challenges that continue to generate fears, as evidenced by reactions to Bulgaria's imminent entry into the Eurozone.
The Euro: between successes and hidden fractures
Twenty-five years after its introduction, the euro has produced tangible benefits: the Eurozone's average monthly inflation rate has decreased and average mortgage interest rates have generally fallen. The average incomes have risen, the percentage of people employed has increased, and the elimination of exchange rate fluctuations has facilitated trade and investment in the Eurozone.
However, the scenario appears less positive on the internal inequalities and synchronous integration between countries, since the Euro seems to have accentuated the gap in fiscal maneuvers among participating states.
The single currency experience, for the first time in history, has split the link between currency and state authority, which also exercises sovereignty through taxation. There is a single monetary authority (the ECB), but not a federal government with a single fiscal policy. This anomaly has made it difficult to offset the effects of a single monetary policy in case of asymmetric shocks, especially in countries with low price flexibility and factor mobility.
What is the price of incomplete integration?
The crises appeared after the introduction of the euro have exposed these fragilities and fuelled current fears.
In Italy, the introduction of the single currency, was associated with a perceived rise in prices, often attributed to speculation related to the difficult mental conversion of the lira. Productivity, already lower than in France and Germany, experienced an even greater gap: in 20 years, Italian productivity grew only 5%, compared to 20.6% in France and 24.4% in Germany.
The sovereign debt crisis (2011-2012) showed how, countries like Italy found themselves “without immediate tools” to deal with financial speculation. Although the ECB's intervention with Draghi's famous “whatever it takes” saved the euro and Italy. The cost was very high: skyrocketing unemployment rate and GDP contraction of more than 10% - remembering that Italy already held the dismal record of public debt to GDP (118.10% in 2010).
The most recent experience of Croatia, that entered the Eurozone on January 1st, 2023-is particularly instructive and fuels the fears of those still hesitant. The entrance into the euro led to an immediate and general rise in prices: some items saw price increases from 3% to 20% and services from 10% to 80% in less than 24 hours. Although inflation was already high due to the energy crisis and the war in Ukraine, the government inspectorate denounced more than 240 out of 1,000 stores for unjustified increases. This generated numerous protests and prompted Croatian consumers to seek better-priced products even in neighbouring Slovenia.
Why do many countries still hesitate?
The experiences and structural criticalities of the euro system explain why the adoption of the single currency continues to frighten, rather than reassure, those still outside the Eurozone.
Renouncing monetary autonomy is a significant cost, especially in countries that do not fully meet the “optimal currency area” criteria. Moreover, for asymmetric shocks, the ECB's single monetary policy may not be suitable for everyone, necessitating autonomous fiscal policies, which, appear to be subject to stringent constraints such as the Stability and Growth Pact.
In particular, we see how in the Czech Republic a 2019 survey revealed that 75% of the population opposed to Euro adoption, preferring to keep control of their own monetary policy. The country had inflation rates well above the benchmark and a budget deficit that exceeded 3% of GDP in 2023. Moreover, its legislation does not appear to be fully compatible with the criteria for euro adoption.
Similarly, Hungary argues that the idea of giving up public finances may reopen “old wounds” related to past submissions.
Finally, Poland, despite experiencing sustained economic growth in the post-communist period, has systematically postponed joining the Eurozone. In particular, the devaluation of the złoty during the 2008 financial crisis, made Polish exports more competitive, reinforcing the idea that maintaining an autonomous national currency can be a strategic advantage in contexts of economic crisis.
What about Bulgaria?
As on January 1st, 2026, Bulgaria is expected to adopt the euro, despite the country’s involvement in ECB monetary policy since 1999. However, we have seen how public opinion is deeply divided: 26.8% of the Bulgarian population disagrees, fearing an outbreak of artificial inflation, as happened in Croatia. Protests led by the extreme right and President Radev's attempt to hold a (rejected) referendum reflect political tensions.
At the European level, this case also fits into the broader debate on the incompleteness of EMU, between the need to complete the banking union, reform the ESM and strengthen economic governance. The Italian silence on these challenges underlines the lack of an informed public debate.
Bulgaria's accession will thus be a test for the EU: will it demonstrate cohesion and management skills or will fear and resistance prevail?
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