As the Euro Slides, a Coin Meets Its Waterloo

By DANNY HAKIMMAY 4, 2015

New York Times

BRUSSELS — Here at the Belgian Royal Mint, machines called giraffes spit out as many as 850 euros a minute.

At times during the summer of 2008, that many shiny coins would have been worth $1,360. Now it is just under $950, a symptom of Europe’s inability to navigate through crisis. Even as the region’s outlook improves ever so slightly, the currency just cannot shake the specter of moribund growth and the troubles of Greece.

But at the mint, there were more immediate concerns during a recent visit. Like the Battle of Waterloo.

Since members of the eurozone are allowed to produce a limited number of commemorative coins, the Belgians recently minted a 2-euro coin memorializing the 200th anniversary of the battle, which ended Napoleon’s rule in France.

But then the French got wind of it. They protested to European officials, arguing that the coin’s design, which shows a lion perched over a map, “appears prejudicial, in a context where the governments of the eurozone are trying to strengthen unity and cooperation throughout the monetary union.”

With 19 members, the eurozone was supposed to be the leading edge of Europe’s integration efforts. But Europe has a lot of trouble grappling with its largest problems — whether to integrate more tightly or drift apart, for example, or what to do with Greece. Trying to run a currency union without a fiscal union and with 19 financial policy agendas has made for messy governing.

European policy makers do have a knack for obsessing over details. They have regulated the curvature of cucumbers and the jugs used to serve olive oil in restaurants. Now, the pressing issue of Waterloo is being addressed.

Much has changed in the two centuries since Waterloo. One of the main combatants, Prussia, bowed out long ago. And the site of the battle is in a country that did not exist at the time, modern-day Belgium.

In the skirmish over the commemorative euros, the side of Napoleon prevailed. The Belgians were left with 180,000 new coins that had to be destroyed.

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When a reporter started laughing at the idea of European nations fighting anew over Waterloo, he was lightly admonished.

“You can laugh about it,” Andre A. Toujour, the royal mint’s assistant manager, said. “We don’t.”

The euro’s value is as much psychological as financial.

This year, the euro has been flirting with parity to the dollar, underscoring the divergent fortunes of the American and European economies. Since the euro was introduced in 1999, it has been at parity with the dollar just twice.

At the debut, the euro started just above a dollar, then quickly plummeted. This was in a strong period for the dollar reflecting the dot-com boom. That bubble finally burst, and by November 2002 they were at parity again as the euro surged against the dollar.

The euro rose as high as $1.60 in 2008. But it began to fall against the dollar as the economic performance of the United States and the eurozone diverged. The Federal Reserve took a much more aggressive posture than the European Central Bank, essentially printing money to stem the financial crisis. And for much of the last year, the euro’s decline has accelerated.

Last year, the Belgian mint produced more than 42 million European coins — from the 1-cent piece to the 2-euro coin — with a face value of 12.9 million euros. That was worth about $15.6 million at the end of last year and $14.4 million on Monday. Back in April 2008 it would have been worth $20.6 million.

“This is a signal that the euro-area economy is weaker than the U.S. economy,” said Zsolt Darvas, a senior fellow at Bruegel, a Brussels research organization. The American economy grew 2.4 percent last year, compared with 0.9 percent for the eurozone.

As their economies diverge, so have their monetary policies. The United States is exiting its aggressive practice of quantitative easing, in which it created money to buy vast amounts of bonds, and it is now poised to begin raising interest rates. Europe, in the meantime, is starting quantitative easing. So one side has decided to stop increasing its money supply while the other is starting to do so, which is pushing the currencies in opposite direction.

The euro, in recent weeks, has stabilized somewhat, as the economic winds have shifted in Europe’s favor. The European economy has shown some faint glimmers of growth, while recent data suggest the United States recovery may be softer than thought. And Europe’s allure remains powerful for the stream of immigrants who risk death crossing the Mediterranean to reach its shores.

But the euro — a volatile reflection of the market’s mood — is hardly on firm ground. Greece, which has a debt payment coming due next week, is quickly running out of money, raising concerns that country may leave the currency zone.

“There are still wide differences to cover and to bridge on substance,” Jeroen Dijsselbloem, president of a group of eurozone finance ministers, recently said, shortly before Greece’s prime minister, Alexis Tsipras, shook up his negotiating team in a bid to revive talks with international creditors.

This year, Moody’s projected that the euro would not fall below the dollar in 2014, while others, like Deutsche Bank, have seen it more likely falling to parity by the end of 2015 and to 85 cents by 2017.

One kind of euro is rising in value — the now exceedingly rare Waterloo coin.

At the royal mint, the giraffes, with their spindly orange necks, sucked up unformed metal slugs from trays and deposit them into boxy gray machines where they are pounded into shape. This is the European dream of togetherness in perhaps its most tangible, if uncertain, form.

“It is a foundation,” said Bernard Gillard, who runs the royal mint. “A foundation for European countries,” echoed Mr. Toujour.

A key in his hand, Mr. Gillard went to fetch a coin from a safe. He leaves a calling card on the millions of coins that are produced here — a tiny image of a cat, because Mr. Gillard is a cat man and has seven of them at home.

He returned with a surviving Waterloo coin, which was encased in a protective covering, and placed it on a table in his office. “It is a beautiful design,” he said.

Mr. Toujour said, “We were quite astonished, because we had a big part of the production ready, so now it’s just a waste of time and a waste of money and a waste of everything, because of the French government.”

The French government declined to comment.