Sunday, October 2

Editorial | Twenty years of the euro

Twenty years after the euro replaced various European currencies, including the peseta, it can be said that the new currency has gone through all the logical states of euphoria and pessimism in an unusual experiment, conducive to experiencing unprecedented situations, but that, in Ultimately, it has consolidated cooperation and control mechanisms impossible if the monetary union. It can also be said that the previous experiment of the ecu made it inevitable that in the medium term the euro would see the light of day and, in favor of its existence, dynamics of economic convergence and management of the economy were set in motion, which every day are more decisive in areas such as the control of spending, the configuration of budgets, the banking system, the issuance of debt and taxation. All this refers to the existence of the euro and everything is different today than it was two decades ago.

The existence of the euro has given rise to three particularly noteworthy events: the successive rectifications required by different crises, of which the most decisive was the one that exploded in 2008 and that took the new currency to a limit situation; the rescue operations that prevented the flagrant bankruptcy of several economies -Greece, Ireland, Portugal, Cyprus- and banking complexes (Spain), and the creation of European funds financed with the European Union’s own resources, of which the ‘Next Generation’ program is the most recent and ambitious. Of course, these same crises gave rise to errors and ill-considered decisions, such as the strict imposition of austerity policies that had a high social cost, but in the end it was possible to avoid the hecatomb that would have implied pushing the solvency of the euro against the ropes.

It can be said that these 20 years have been largely one of forced learning due to the lack of precedents or the remoteness of some of them -the problems that followed the creation of the dollar-, to the urgent need to assemble economies with substantially different structures and the obligation to coexist within the EU with the currencies of other partners who, by their own free will or because they do not meet the conditions required by the euro, have not been integrated into it. But also due to the fact that a single issuing bank and a single monetary policy, largely derived from that established by the Bundesbank, has required collective discipline, with new rules and closed shortcuts, such as recourse to the devaluation of national currencies in times of crisis.

Of such learnings, with their hits and misses, the impression has arisen that the foundations of the euro have been solidified, and that its managers have still had the reflexes necessary to correct some of the dogmas of the first years. Among them, the cooling of risk premiums through massive debt purchases and the ‘de facto’ interest rate freezeTwo possibilities that seemed little short of indefensible when the European Central Bank got going. For the rest, there is no doubt that there is still a long way to go until the viability of the euro is no longer a topic of conversation, but it is at the same time a certain fact that those who predicted a hazardous existence to have muted their criticism. the European currency versus the historical strength of currencies such as the dollar and the pound. But it seems that the euro has gained its own space in the global economy.

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