Some thoughts on the twenty years of the euro
On the occasion of the 20th anniversary of the adoption of the euro, on the initiative of Eurogroup President Mr. Paschal Donohoe, members of the Eurogroup, including the Minister of Finance, Mr Konstantinos Petrides, jointly prepared an article entitled "Some thoughts on 20 years of the euro".
In particular, the following article is co-authored by Magnus Brunner, Minister of Finance of Austria, Nadia Calviño, First Vice-President and Minister of Economy and Digitalisation of Spain, Clyde Caruana, Minister of Finance and Employment of Malta, Valdis Dombrovskis, Executive Vice-President of the European Commission for an Economy at the Service of People, Paschal Donohoe, President of the Eurogroup and Minister of Finance of Ireland, Daniele Franco, Minister of Economy and Finance of Italy, Paolo Gentiloni, European Commissioner for Economic Affairs, Pierre Gramegna, Minister of Finance of Luxembourg, Wopke Hoekstra, Minister of Finance of the Netherlands, João Leão, Minister of State and Minister of Finance of Portugal, Bruno Le Maire, Minister of Economy, Finance and Recovery of France, Christian Lindner, Minister of Finance of Germany, Mairead McGuiness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union, Igor Matovič, Minister of Finance and Deputy Prime Minister of Slovakia, Keit Pentus-Rosimannus, Minister of Finance of Estonia, Konstantinos Petridis, Minister of Finance of Cyprus, Jānis Reirs, Minister of Finance of Latvia, Annika Saarikko, Minister of Finance of Finland, Andrej Šircelj, Minister of Finance of Slovenia, Gintarė Skaistė, Minister of Finance of Lithuania, Christos Staikouras, Minister of Finance of Greece, Vincent Van Peteghem, Minister of Finance of Belgium.
Twenty years ago tomorrow, some 300 million Europeans held in their hands a brand new currency, the euro. From Lisbon to Helsinki to Athens, citizens were able to withdraw euro notes at local ATMs, do their shopping in euros and travel abroad without changing currency.
The transition from 12 national currencies to the euro was historically a one-off of its kind: the European Central Bank issued more than 15 billion euro notes and minted some 52 billion coins before 1 January 2002.
Taking advantage of the spread of the single market, the euro became one of the most tangible achievements of European integration, along with the free movement of persons, the Erasmus student exchange programme or the abolition of roaming charges within the EU.
At a deeper level, the euro reflects a common European identity, symbolising integration as a guarantee of stability and prosperity in Europe.
As finance ministers and members of the European Commission who steer the economic policy of the euro area, we look back together on the last 20 years and identify some priorities for the future of our common currency.
The last 20 years - maturing
Admittedly, the first two decades of the euro have been eventful.
From great excitement in its early days, the euro has emerged as the second most used currency in the world. Our common currency remains very popular - around 80% of citizens believe the euro benefits the EU - and the euro area continues to expand: from 11 original members to 19 countries today, with even more on the path to membership in the coming years.
This progress has been made in the face of serious challenges. The project was viewed with caution by some while it was still in its infancy.
In its tenth year or so, it became increasingly clear to member states and institutions that the euro architecture had not been designed from the outset to cope with the severe shock of the global financial crisis and the ensuing sovereign debt crisis. This triggered the reform of the euro area governance framework, the creation of a common support mechanism for countries facing financial difficulties and the establishment of a single supervisory system for European banks, in recognition of the need to find a solution through broader coordination and deeper integration.
These early crises allowed the euro to mature and strengthen its international role. We also learned valuable lessons that have proved useful in the current pandemic, which knows no borders and has highlighted both the extent of our interdependence and the strength of our unity.
When the scale of the COVID-19 crisis became clear, it was met with much faster, more decisive and more coordinated policy action, unlike previous crises. While existing tax and welfare systems managed to cushion the economic impact, the EU took unprecedented decisions to further protect lives and incomes, complementing the supportive monetary policies of the ECB. Our collective response included the SURE financial support programme, which helped to protect some 31 million jobs, and the ground-breaking Next Generation EU recovery plan.
Our coordinated policy response, combined with the availability of COVID-19 vaccines, helped the euro area to recover quickly from the economic impact of the pandemic. Moreover, the financial and liquidity support provided was designed to limit the risk of long-term losses so that our economies could quickly regain lost ground.
The next 20 years
We have achieved much in the first 20 years of the euro, but more needs to be done.
We need to keep pace with innovation and promote the international role of the euro. The euro itself must adapt to the digital age. That is why we support and contribute to the ongoing work of the European Central Bank on the digital form of our currency.
At the same time, the euro area must be further strengthened. While our European banking system is built on strong foundations, we must make further efforts to strengthen our banking union and offer new opportunities for economic recovery and growth. The same applies to our capital markets: we must take decisive action to improve the way private investment and savings are channelled across the single market to give our businesses, including SMEs, the finance they need and then create new job opportunities.
Investment levels have remained too low for too long: We need to invest in our people, infrastructure and institutions, and our investments need to be massive and sustainable. Combined with responsible fiscal policies and the contribution of the private sector, the Next Generation EU will play a key role in delivering many necessary reforms and investments. It is the best instrument we have to boost our growth potential, improve our living standards and meet the critical challenges facing humanity.
We also need to ensure fiscal sustainability in the face of an ageing population. In the context of the review of our common fiscal rules, we need to guarantee that euro area fiscal and economic policies are fit for purpose in a changing environment and responsive to future challenges.
Our common currency is an unprecedented collective endeavour, and testifies to the unity that underpins our Union.
As the world recovers from the pandemic, it is time to combine our efforts and resources to reap the benefits of a rapidly digitising world and to manage the climate emergency. None of these issues can be addressed by countries acting in isolation. The euro is proof of what we can achieve by working together; looking ahead to the next 20 years, let us make it a symbol of our commitment to ensure a sustainable, prosperous and inclusive future for generations to come.
\NEX/SX\NContents of this article including associated images are owned by PIO\NViews & opinions expressed are those of the author and/or PIO\NSource
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