When a coffee cost 100 pesetas (60 cents)

There was a time when making coffee in Spain it did not even reach 100 pesetas (60 cents). Specifically 20 years ago, just when the euro began circulating, on January 1, 2002, culminating in a process of monetary and economic union (UEM) in three phases that began on July 1, 1990. Today you can hardly drink a cup in a bar for less than double. The night of Cap d’Any of 2001 it was still paid in pesetas, but the next day a new currency, of which each unit was equivalent to 166,386 pesetas, came into our lives to stay together with the pennies (the hundredth of a monetary unit) forgotten for years. There was a lot of anticipation even for a holiday like New Year’s Eve. “Rest assured that there will be euros today, tomorrow, over and over once more,” he had to go out and explain. Luis Berges, director of Bank of Spain, a Barcelona on January 1, 20 years ago, in front of hundreds of people queuing at the organization’s headquarters in the Plaça de Catalunya. The weather proved him right, but at that moment, the warning fell on deaf ears. Out of novelty or fear of a shortage of banknotes and coins, people did not leave. The same happened at other branches of the Bank of Spain. It was an unprecedented change.

Every day at all hours

“Don’t you see that we are living a historic moment? We have the right to be taken care of, ”replied an angry lady who had been waiting since eleven o’clock in the morning, when the bank and 900 other bank branches from all over Spain opened their doors. “I think they are confused. There will be euros every day. If they stay today, they will end up having lunch at five o’clock in the followingnoon, “he insisted. But no case. In the end, in the face of the onslaught of the public, the Bank of Spain had to close its doors an hour earlier than expected. This journalist, present at this event, testifies to this. Reality prevailed and soon the situation normalized by checking that there were euros every day and at all hours. In fact, 50 billion coins were minted for the eurozone as a whole and 14.5 billion banknotes were printed, of which 10 billion would already be circulating in January. The same scene as in the Bank of Spain was lived in the bank branches that opened their doors, with the limitation of 600 euros per customer to prevent currency grabbing. Most wanted smaller amounts, with the exception of more anxious people carrying a sports bag or briefcase, and in these cases they had to go to the Bank of Spain. In any case, it has been possible to exchange pesetas for euros until June 30, 2021.

The single currency has been, in essence, a success. Although during this time, inflation has accumulated an increase of almost 50%. It is true that there are products that can be even cheaper, but others are extremely more expensive: for example, the bread bar. With so much competition and types of products, any comparison becomes difficult. And the same goes for other goods and services, but overall, the rise in the shopping basket has been undeniable. Wages, on the other hand, have been revalued by regarding 20 points less, around 30%, if the average salary is taken as a reference. This means that they have lost purchasing power. Inflation in December 2021, soaring to 6.7%, is helping to widen this gap.

A solid euro despite the crisis and mistakes

Rising prices

The biggest price jump came in 2002, with the famous rounding and when products that cost 100 pesetas, overnight, became 166,386, the change of the peseta once morest the euro. An increase of more than 60%. From 100 pesetas to one euro without continuity solution. “A euro is easier than I don’t know how many cents,” some apologized. Then, with prices with a higher starting point, the waters returned to their channel and the peseta remained as a memory and a benchmark to calculate for those who had lived a good part of their existence with this currency.

Since the euro began to circulate until today, there have been three major economic crises. The first, which erupted in 2008, began in the real estate sector and moved to the entire economy. The second, in 2010, punished European debt. It originated from external private sector debt that led to a banking crisis. This was transformed into a fiscal crisis and, due to the failures in the economic governance of the euro area, into a sovereign debt crisis, which led to the rescue of Greece, Ireland, Portugal i Cyprus and that forced Brussels to launch a lifeline of up to 100 billion in Spain that the government, then led by Mariano Rajoy, refused to call rescue. And in 2020, the coronavirus crisis, with the biggest economic downturn in peacetime. Lessons have been learned from all of them, and all of them have served to corroborate that, with their shortcomings and shortcomings, the single currency – and all that it entails in terms of interest rate commitments and other variables – has served to some were smaller than they would have been without the euro, according to experts.

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