The Euro at Twenty: Reflections

Abstract

When the euro turned 20 years old on January 1, 2019, the anniversary of the EU’s single currency was met with sober reflection rather than euphoric celebration. Some lessons had clearly been learned since Jean-Claude Trichet, president of the European Central Bank (ECB), made his unfortunate comparison of the euro with a “large, solid, and steady ship” ten years earlier, which was less than a year before the euro area’s sovereign debt crisis pushed the single currency to the brink of disintegration.1 While real progress has been made in putting the euro on a more sustainable institutional footing, EU leaders have not fully rectified its design flaws and continue to be obsessed with national fiscal profligacy and lagging member state competitiveness as the roots of all evil. At the same time, the founders of the euro – former Commission president Jacques Delors; former French president François Mitterrand; and especially, former German chancellor Helmut Kohl – continue on the whole to be revered as visionaries of European integration, though a more critical look at their legacies would result in a decidedly less glossy account. Werner Becker’s contribution to this volume was originally written in the spring of 2011,2 in the midst of the eurozone debt crisis. He tries to give a balanced assessment of the first twelve years of the single currency, discussing its many strengths without being blind to some of its weaknesses. Becker sees a positive performance of the euro during its first twelve years, especially when it comes to maintaining price stability, keeping interest rates relatively low, stimulating trade and financial market integration, reducing economic risks, and increasingly acting as an international reserve currency. However, he is quick to point out that the eurozone’s pace of economic growth was rather mediocre in its first twelve years (a trend that has continued since 2011), and that the euro has not fulfilled its promise to become the currency of all EU member states, with only very small new member states joining since 2002. For Becker, there is no doubt that the euro