The Euro After 10 Years

With the 10th anniversary of the launching of the euro, everyone is taking stock. The record of the euro shows both pluses and minuses. Looking back, the euro has in many ways been more successful than predicted by the sceptics—many of them American economists. The historic transition to a monetary union among 11 countries in 1999 went smoothly, the euro instantly became the world’s number two international currency and the officials of the European Central Bank (ECB) have from the beginning worked as citizens of Europe rather than as representatives of home constituencies. After a rocky start, the ECB has achieved a strong reputation, the euro has achieved a strong value and new members to the east have achieved membership in the club. Some of the sceptics’ warnings, however, have turned out to have merit: Shocks have hit members asymmetrically, cushions such as US-type labour mobility have remained thin and the Stability and Growth Pact has proven unenforceable.