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The euro celebrated its twentieth anniversary on Saturday January 1. It is now the common currency for 19 European countries. Twenty years is, they say, the age of possibilities …
This applies quite well to the European currency since it has not yet kept all of its promises. It is far from having become an alternative to the dollar as the Europeans dreamed of. But it is a currency that has a consensus among those who use it and it is in itself a success. The Greeks, who have suffered so much from the intransigent application of the euro rules, are nevertheless very attached to it. Opponents, often on the extreme right of the political spectrum, ended up converting to the single currency, this is true in Italy as in France. And she continues to make people want. Croats and Bulgarians are on the list of the next members. African countries that plan to launch a common currency, the Eco in West Africa, are watching with interest the construction and management of this still young currency but already well established in the global monetary landscape. It is the second currency following the dollar, it represents 20% of transactions.
What are the advantages of the euro for its users?
For citizens and businesses alike, this simplifies trade throughout the monetary union. No more currency problems at the borders, no more race for competitive devaluations for governments seeking to defend their exports. Even if the arrival of the euro is often associated with a surge in inflation, in reality, on the contrary, it made it possible to curb the rise in prices by the action of the European Central Bank. And the poorest countries have long benefited from the modest interest rates guaranteed by the single currency thanks to the presence of heavyweight exporters from northern Europe, Germany of course and also the Netherlands.
But it is also this easy money that has thrown the most fragile in the debt crisis.
A crisis which highlighted the disparity of the member economies of the monetary union. And the lack of solidarity of the rich countries of the North with those of the South. But this growth crisis, overcome in pain, did not destroy the euro, quite the contrary. We can see today, through the new economic crisis caused by the Covid-19 pandemic, that the Member States have matured and that they are beginning to recognize the duty of solidarity inherent in a monetary union. For the first time, Europeans are raising common debt and the money is redistributed, including in countries that are not members of the euro.
What are the challenges facing the euro?
The return of inflation is undoubtedly the urgency of the moment. The European Central Bank will have to maneuver skillfully to avoid a blaze in prices and wages. The members of the euro zone must also reform the Maastricht rules which can be counterproductive in coming out of the crisis. Given that the new German government seems a priori favorable to it, this project now seems within reach. Finally, this very young euro, barely out of adolescence, has to face unexpected competition, that of cryptocurrencies! Here too, the European Central Bank will have to show vigilance and imagination to prove that the single currency is capable of adapting to this new digital situation imposed by bitcoin and its avatars.
►In short
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