When the Euro was launched in 1999, I was but a wee lad, barely over one year into an undergraduate degree in the dismal science. The common currency was something of a curiosity at the time as its ambition was unprecedented even for our globalized age. After all, it certainly seemed to be one giant step ahead of my country’s own feeble attempt (in comparison) at economic union: NAFTA, which had barely half a decade of existence at the time. For those who were worried about US hegemony, the launch of the Euro was a subtle reminder that a new and powerful economic force was being born, one which would hopefully shape the global economy into the more socially progressive image of Europe, rather than the rapacious gung-ho capitalism which Washington and Wall Street had shoved down our throats. More symbolically, it represented – at least in my eyes – a watershed event in history, whereby for the first time Europe was united not by Napoleon’s guns, or Hitler’s panzers, but by a common and voluntary belief that the path to future prosperity was one that no European country should have to travel alone.
How the times have changed. I’m not going to dwell on the implications or even the possibility of a Euro breakdown (there’s plenty of that around), but it has come to a point where a economists we should really question whether the Euro was that great leap forward promised a decade ago by Europe’s leaders, or a colossal mistake whose benefits were overhyped and its potential drawbacks blissfully (or conveniently) ignored. For this I found a nice little PDF from the European Commission, probably written around 2007, right before the financial crisis exploded in everyone’s faces. With the benefits of hindsight let’s see whether the Euro has lived up to its lofty promises. Continue reading