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Euro's 20th anniversary

Thursday, 24 January 2019 1:14 AM [ Last Update: Thursday, 24 January 2019 9:57 AM ]

Euro 20th anniversary

The Euro made its debut on New Years Day in 1999. But at the time it was not just a financial idea. Politics played a major part also. Many of the architects of the currency lived through or witnessed the aftermath of World War Two in Europe.

In 1993 the European Economic Community also known as the Common Market was reformed. European leaders wanted nations to trade together and share institutions. The idea to form a single currency was intended to secure peace and prosperity. Economists argue countries that use the Euro are paying a heavy price as the Euro-zone is lacking a system that can transfer resources from one part of the zone to another.

As there is one currency, there is one interest rate. However, there is no tax revenue for example to stand alongside a financial union. Unlike the United Kingdom or the United States, there is no real mechanism which can recycle taxes raised in parts of the Eurozone that are doing well to parts of the Euro-zone that are not doing so well.

Euro zone members lost important policy levers when they gave up their national currencies. If their economies struggle, how will they stimulate economic growth? They no longer have a national currency to devalue so that exports and employment levels increase

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