As the world ushers in a new year on January 1, 2026, Bulgarians will wake up with anxiety. The New Year shall kick-start a process of the European nation giving up its currency, lev, for the euro. In 1999, the monetary world witnessed a grand experiment where 11 European nations united to give up their monetary policy to a common central bank and adopt a common currency. In 26 years, 10 more countries including Bulgaria have joined euro. This popularity of euro points to an interesting paradox: While the currency seems to be working, Europe is faltering.

How and why did select European countries adopt a common currency? To answer the question, we need to read monetary history. One major struggle for most economies has been to find an appropriate exchange rate system. Before the Second World War, economies fixed currencies to gold. In 1944, under the Bretton Woods (BW) agreement, countries decided to fix exchange rates against the US dollar which was fixed against gold.

In 1971, then US President Richard Nixon dismantled the BW system by delinking US dollar from gold. Most economies were used to being a part of some form of fixed exchange system; they had to now scamper for alternative choices. The........

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