At 20 the euro is still looking for

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If the arrival of the euro dates from 2002, the birth of the European single currency dates back to January 1, 1999. An assessment of twenty years of successes and failures of the most symbolic European projects.

At the same time the most beautiful symbol of European construction and scapegoat for all ills of the countries of the Union, the euro, celebrating its 20th anniversaryst January 2019 divides the Europeans. Read the outraged reactions to the tweet by Jean-Claude Juncker, published on December 31, in which he says that the single currency has brought "prosperity and protection" for European citizens. The comments blame the blindness of the President of the European Commission, as the French economist Thomas Porcher emphasizes "we were poorer in the euro area in 2017 than in 2007".

It must be said that the euro has undergone a full test with the financial crisis of 2008. It has shown that the European currency was strong, but that it had weaknesses in its design.

"Mistakes have been made, Judge Agnès Bénassy-Quéré, economist, deputy representative of the Council of Economic Analysis (CAE), interviewed by France 24. The first mistake was to create a monetary union without banking union. connected with the absence of a single sovereign state: there is a distinction between the perimeter of the currency and that of the states, and the central bank is forbidden to repurchase the sovereign debt, States to save each other and to states to restructure debt. "

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As a result, the European Union was not equipped to cope with the 2008 crisis and Member States reacted mainly with austerity measures. The Greek example, where social costs due to the absence of solidarity mechanisms within the euro area were considerable, is undoubtedly the most significant.

"About Greece, the European Central Bank pushed the walls as much as possible to give a bit of air by earning a little bit of money [rachat par la BCE des dettes publiques], bailout and restructuring, but we have not really solved the problem, "says Agnes Bénassy-Quéré.

No convergence of economies

Since then, improvements have been made, in particular with the establishment of the European Stability Mechanism (ESM), which aims to protect the euro area from speculation about public debt. Banks are also better monitored. "But it still does not have a real budget to absorb the shocks in the most fragile states," estimates in Le Monde Patrick Artus, economist at Natixis.

The other major failure of the euro area, which has grown from 11 to 19 members in twenty years, is that it has failed to bring the economies of the Member States closer together. "Our fiscal rules are not very effective for accompanying policies, says Agnès Bénassy-Quéré, we do not have many tools to prevent economies from falling apart and we have a very asymmetric adjustment." The rule that states must limit their government deficit to 3% of GDP is criticized in particular because on the one hand convergence of economies is not possible and states on the other are deprived of flexibility in times of crisis.

But the euro has also achieved successes. For Agnès Bénassy-Quéré, "monetary unification was a success" because "there was no currency trading" during the 2008 crisis. "With the previous system we would have had devaluations in ruins and it would have been very complicated to manage for companies and banks ", says the CAE economist.

It is this stability for the common market that undoubtedly wanted to emphasize Jean-Claude Juncker in his tweet, which released criticism. European companies have never really operated in such a safe environment: this applies to relative prices (the price of one good compared to the price of another) when dealing with others. Countries of the euro zone, loans at very low rates or the risk of devaluation in a given country. "And for households, the euro has made purchasing power much more stable than before, because inflation has become very predictable," adds Agnès Bénassy-Quéré.

Twenty years after its foundation, this half-hearted balance can ensure that pro and anti use the euro to support their argument. And despite its creation as the currency of the second world behind the dollar, survival is far from over. It should be one of the key points of the European elections of 2019.

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