The buying power of one euro (1€) has depreciated by a whopping 30% between 2000 and 2020 from 1€ to 0.7€, according to data researched by Trading Platforms UK. This means that the same one Euro can’t pay for a similar amount of goods or services like in 2000.
During the 2008 financial crisis, the euro’s buying power had depreciated to 0.81€ and in 2009 the value remained the same.
The report cites inflation as the key contributing factor to the depreciation of the Euro’s buying power. However, the analysis highlights other contributing factors.
“The Euro has also lost the purchasing power due to the (European Central) bank’s policy during the major economic crisis. In the wake of the 2008 financial crisis and the coronavirus pandemic, the bank lined several additional stimulus packages to tackle the crisis,” the report said.
“In this case, interest rates remained high, with most investors turning to save-haven currencies like the U.S. dollar. The purchasing power has further deteriorated over the pandemic’s second wave.”
Furthermore, the emergence of digital currencies has contributed to the depreciation in the euro’s buying power.
Digital assets that have shown resilience during the last economic crisis are now viewed as a possible safe haven. Even the ECB is considering adopting a digital euro.
Over the last decade, digital assets have risen in popularity, with proponents calling on people to ditch fiat money.