It seems hard to believe that just a few short years ago, one of the world's top supermodels was insisting she be paid in Euros, not US dollars, and there was plenty of speculation that the Euro could supplant the almighty American greenback as the world’s reserve currency. 

It is still possible that the Euro could one day be the dominant global currency. I mean, anything’s possible. For example, it’s possible that Canada could one day decide to invade Montana.

While the Euro’s eventual dominance is still a much more likely possibility than Canada someday annexing part of the U.S. Northwest, right now there are plenty of people wondering if the Euro will even exist in a few years.

The fact that serious people are even talking about the possibility of an end to the Euro at all is pretty remarkable.  If the currency does go down for the count, to go from potential U.S. greenback giant-killer in 1999 to collapse less than 15 years later will be one of the more remarkable episodes in economic history.

The Currency to End All Currencies

A quick refresher: The Euro was a single currency adopted by several European countries in 1999 (although actual Euro bills and coins weren’t put into circulation until 2002). Now the currency of 17 European nations with a combined population of 330 million, the Euro was a key part of the European Union’s plan to pool its member countries’ economic clout together to become one of the most powerful players in the global marketplace.

Now there is talk that Greece’s massive fiscal problems will force it to leave the Euro, which would be a huge psychological blow to the whole European Union project and possibly lead to a cascade effect eventually forcing other countries to abandon the Euro. If things go badly enough, some wonder if all the European countries will eventually give up the Euro and revert back to their original individual currencies.

To read the European Union’s web page on the Euro is either funny or sad, depending on your point of view. A few excerpts:

“The euro is not the currency of all EU Member States. Two countries (Denmark and the United Kingdom) agreed an ‘opt-out’ clause in the Treaty exempting them from participation, while the remainder (many of the newest EU members plus Sweden) have yet to meet the conditions for adopting the single currency. Once they do so, they will replace their national currency with the euro.”

Something tells me those countries without the Euro are not going to be rushing to "meet the conditions" for membership anytime soon, thanks to the chaos within the Eurozone that the world has witnessed over the past several months.

“Apart from making travel easier, a single currency makes very good economic and political sense. The framework under which the euro is managed makes it a stable currency with low inflation and low interest rates, and encourages sound public finances.”

At least four Eurozone countries, Ireland, Portugal, Italy and Greece, are fiscal basket cases right now. If you wanted to be less charitable, you could put the figure much higher. The Euro really did a nice job of encouraging sound public finances.

Helloooooooo, Drachma!

So, while acknowledging that the Euro’s demise is still more unlikely than likely, what would happen if the Euro were to collapse?  Well, there’s that business of all those old currencies. Let’s take a stroll down memory lane and look at some of the old European currencies that may be making a comeback in the next few years:

The Greek Drachma

Given Greece’s political and financial turmoil, this is the currency that is the most likely to make a return in the near future. The origin of the drachma as currency in what is now Greece dates back to 1100 BC, but the modern drachma was first issued in 1833. One Euro is worth approximately 341 Greek Drachmas.

The Italian Lira

With Italy also facing heat for the state of its books, and Italian Prime Minister Silvio Berlusconi “waxing nostalgic” about his country’s former currency, maybe those old Italian lire stuck in a drawer from that vacation you took in the 1990s might someday prove useful after all. The lira (pluralized “lire”) was in use from 1861 to 2002. Notes were in much higher denominations than we Canadians are used to: notes in circulation before the Euro was introduced ranged from a 1000-lire note featuring educator Maria Montessori to 500,000-lire notes featuring Renaissance painter Raphael. (In contrast, Canada doesn’t currently issue bills higher than $100). One Euro is equivalent to approximately 1936 Italian Lire.

The Irish Pound

The pound had existed in some form in Ireland  for centuries, but had undergone numerous transformations, in large part due to the island’s complicated relationship with England. The most recent version of the punt Éireannach (as the Irish pound is known in Gaelic) was issued as a coin with the Irish Elk, a long-extinct animal, on one side. Will the Irish Pound remain extinct like the Elk? For now, the Irish government has no intention of leaving the European common currency. One Euro is worth about 0.79 Irish pounds.

The French Franc
Now we’re getting into very speculative territory: things would have to go very, very, very badly for France to abandon the Euro. But since we’re revisiting European currencies of the past, how can we ignore one of the continent’s most illustrious former monies? The first franc was issued in 1360 to celebrate the release of the French King John II (“John the Good”) who had been captured by the English at the Battle of Poitiers. The franc was replaced by King Louis XIII with another currency in 1641 but made a comeback in 1795 and remained the French currency until its replacement by the Euro. A Euro is worth roughly 6.56 French francs.

The Deutche Mark

As in the case of France, Europe’s economic situation would have to deteriorate much, much further for the Germans to return to the mark. The Deutche mark had a much shorter lifespan than its French counterpart, in circulation only between 1948 and 2002. It was introduced after World War II in part to halt rampant black market activity, where American cigarettes acted as currency. The Euro is equivalent to approximately 1.96 Deutche marks.

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Photo credit: Images of Greek drachma, Italian lira, Irish pound, French franc and Deutche mark notes courtesy the European Central Bank.