January 1 marks 20 years since the creation of the euro. The currency prevailed in the markets and in the portfolios of securities and survived its great crisis, but it seems doomed to be a fragile colossus, unable to achieve greater European solidarity.
At first it was a virtual instrument used only by financiers, accountants and administrators, until it appeared on January 1, 2002, therefore 340 million citizens from 19 countries (eurozone) currently use the same currency.
The European Central Bank (ECB), which took over the management of monetary policy in 1999, argues that it avoided price escalation, despite the fact that the image of the inflationary euro remains the brand in its own right.
However, the popularity of the euro is at its highest level. On average, 74% of eurozone citizens believe that a single currency was beneficial for the European Union (EU), and 64% for their own country, according to polls published in November by the ECB, and this is happening at the same time as populist movements against the EU are strengthening in all parts of the continent.
“The euro is tied to the population, and even the parties that opposed the system should have recognized this,” as it happened recently in Italy, says Nicolas Verone, an economist at the Bruegel Institutes in Brussels and Peterson in the United States.
The euro also stimulated intercommunal trade and is the second most used currency in the world, although it is significantly inferior to the US dollar.
Deficiencies and divisions
But in the middle of the summer (boreal) 2012, the young history of the single currency was almost interrupted and was dragged out by the sovereign debt crisis, which threatened to disable the banking system.
These events reveal the initial shortcomings of this currency: the lack of fiscal solidarity for the mutual distribution of debt, investment and, consequently, the risk of deep differences between the economies of the eurozone in the absence of a creditor as a last resort for states in difficulties, etc.
Against the background of the Greek crisis, in particular, as a background, “the euro feeds mutual recriminations; for their part, the southern Latin countries attack the north with their ordoliberalism (the flow of economic thought related to a market economy was developed several decades ago in Germany), and on the other part, those who live in the north and Hispanics for their weakness, ”says Eric Dore, director of economic studies at IESEG (International School of Commerce).
Mario Draghi, the president of the ECB, managed to put out the fire in the summer of 2012, saying his department would do "everything possible to save the euro."
Since then, the ECB has a program to buy, under certain conditions, an unlimited amount of debt from a country attacked in the markets. Up to this point, the weapon of persuasion has never been used, but it served to restore calm.
And to stop the specter of deflation, considered to be a poison for the economy, the ECB took unprecedented action, raising its interest rates to its lowest level and buying mostly national debt from 2015 to 2018 for a certain amount. Only 2.6 billion euros.
However, at the political level, little or nothing has been done to correct the inherent deficiencies of the currency. 19 countries still do not have the tools to correct differences in development or investment to solve economic problems.
From clay to brick
In the 1990s, "the most important in Europe was at the economic level to provide a single market with a single currency to put an end to significant changes in the exchange rate (currencies) of member countries and at the political level." to bring united Germany to Western Europe, ”said Gilles Moek, an economist at Bank of America Merrill Lynch and a former Bank of France official.
Although at the time these arguments were enough to “sell” the euro to the public, the building could not be consolidated since.
According to the “minimal” reform in the euro area, announced in December 2018, 19 member countries reached an agreement only on a very limited budget instrument.
The boldest ideas — the eurozone finance minister or the creation of the European Monetary Fund, and others — were rejected in the last 18 months of negotiations.
For its part, "the ECB has remained a bit" after stabilization of the currency and the banking system, warns Moec.
On the other hand, economist Nicholas Verona is more optimistic. For him, with banking sanitation, government debt, and the ECB’s actions, the euro is now “a colossus of bricks, not clay.”