Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Wednesday, March 27, 2019 05:17:05 AM
Follow Us On: Facebook Twitter Twitter Twitter Twitter
BREAKING NEWS:

Two decades of Euro as common currency of EU

By
09th-Jan-2019       
Comments
Share your thought
Post a comment »
Read all () »

Mariella Radaelli and Jon Van Housen :
The success of the euro requires political and fiscal union, certainly an increased role for fiscal policies to help growth and stimulate employment as well as sharing of debt. Twenty years ago, Europe had a common currency for the first time since the end of the Roman Empire. It was an economic experiment of unprecedented scale that carries on until today with its benefits as well as systemic flaws.
The single currency was adopted as a currency peg at midnight on January 1, 1999, and on New Year's Day 2002 it was adopted as an actual physical monetary system in 12 countries. It first was introduced in the original Eurozone members: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain and Portugal. And later Greece, Slovenia, Cyprus, Malta, Slovakia, Estonia, Latvia and Lithuania, too, adopted it over the years.
Now the euro is the second-most widely used currency in forex trading after the US dollar. Around 340 million Europeans use the currency, and it is a de- facto legal tender in a number of other regions. Countries outside the EU include the French overseas departments of Guadeloupe, Guyana and Martinique in the Caribbean as well as Mayotte and Réunion in the Indian Ocean. Fourteen African nations have also pegged their currency to the euro. The euro was largely deemed successful in the beginning, generating hope, expectations and economic enthusiasm.
For the first few years, the Eurozone flourished with adequate growth and inflation within the European Central Bank's target rate of two per cent. The figures were positive, though they concealed growing structural tensions.
The interest rate set by the ECB tended to be one that made more sense in Germany, the economic powerhouse of the Eurozone. In those years, low interest rates helped keep money cheap and the value of the euro low. That benefitted Germany but damaged weaker countries that progressively found themselves in dire straits.
"For 20 years, the euro has delivered prosperity and protection to our citizens,"
European Commission President Jean-Claude Juncker tweeted a few days ago. That might be true for some, but the reality is that poverty is rising on a continent where countries move at different economic speeds. Instead of 'Unity in Diversity' - as the English translation of the EU's Latin motto In varietate concordia states - members are divided over what makes a fairer Europe. Some citizens feel they are living in a monetary straightjacket. But surprisingly, most are still fans of the euro. Two of the three euro-citizens still favour the common currency, as per a survey by Bloomberg.
Yet many EU nations are struggling to understand how euro can give better results, especially in view of burgeoning levels of debt over the past 10 years. And the era of quantitative easing (QE) is over for now. On January 1, ECB brought down the curtain on its stimulus programme that has pumped in almost ?2.5 trillion in bond purchases since 2015. What will be the consequences on the weakest economies?
"The end of QE does not mean a total disengagement from the ECB," says economist Mario De Aglio. "Faced with strong instability due to some Eurosceptic forces, the ECB will continue to act to defend the euro."
The single currency is fundamental to the functioning of a single market: It fosters trade integration and prevents competitive devaluations. But its creation without institutions that enable a region as diverse as Europe to function effectively was a serious mistake. The success of the euro requires political and fiscal union, certainly an increased role for fiscal policies to help growth and stimulate employment as well as sharing of debt.
"The single currency will never work equally for all the member states until the unification of tax legislation is completed," says political scientist Roberto Marchesi.
"The loss of monetary sovereignty creates serious imbalances in countries forced to follow a change in their currency that is not directly related to the performance of their economies."
The euro is "the craziest thing that Europeans have built together - and the most utopian," writes an economist from Le Monde.
Sure enough, Germany has been the principal beneficiary. But also Finland, Austria and even the heavily indebted Belgium performed better in managing the 2008 economic crisis by adopting the euro. The benefits of monetary union were irrelevant for France and Italy, two of the six founding members of the European Union. Other troubled southern economies such as Spain, Malta and Cyprus have been mediocre in growth and performance. There is no easy way to raise competitiveness other than implementing structural reforms that some countries have so far avoided.
Considering the present scenario, one is reminded of Margaret Thatcher, who now seems prophetic about the failure of a single currency. In a speech before Britain's House of Commons in 1990, the former British Prime Minister was opposed to the idea of giving up the pound for a single European currency. "Germany will show its historical phobia for inflation and less productive southern European countries will have problems remaining competitive with a strong currency, and there will be tensions," she said. A few weeks later she resigned from the premiership.
In the recent past, the UK has taken a firm course. But now after Brexit, can the Eurozone pursue full fiscal union?
(Mariella Radaelli and Jon Van Housen are editors at www.luminosityitalia.com news agency in Milan)

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Nation's supreme sacrifice for independence must not go in vain


THE nation is set to celebrate 49th Independence Day and National Day today. This year, the Independence Day has got special attention following the announcement of United Nations Under-Secretary General and Special Adviser on Prevention of Genocide Adama Dieng. The special envoy on Sunday said that UN will raise the ...

Cricket »

Brian Lara hopes to witness an India-Pakistan final in WC 2019


Former West Indies legend Brian Lara predicted India as favorites to claim the World Cup title.While the cricketing interactions between sub continental arch rivals hit an all-time low in barometer following never ending political disarray, Caribean living legend has foreseen a repeat of the 2017 ICC Champions' Trophy final where ...

International »

Venezuela crisis: Russian military planes land near Caracas


Two Russian military planes landed in Venezuela's main airport on Saturday, reportedly carrying dozens of troops and large amounts of equipment.The planes were sent to "fulfil technical military contracts", Russia's Sputnik news agency reported.Javier Mayorca, a Venezuelan journalist, wrote on Twitter that he saw about 100 troops and 35 tonnes ...

International »

New Zealand's Ardern orders top-level inquiry


New Zealand's Prime Minister Jacinda Ardern has ordered a top-level inquiry into the Christchurch mosque attacks that left 50 people dead.She said a royal commission would examine whether police and intelligence services could have done more to prevent the 15 March shootings.A royal commission is the highest level of independent ...

Entertainment »

I am a part of a film that will help people see beauty in different light: Deepika


Bollywood’s leading lady Deepika Padukone has time and again exhibited her thirst for challenging roles with her diverse choice of films. Giving testimony of the same yet again, Deepika will be seen slipping into the skin of an acid victim survivor for Chhapaak and is exhilarated to give to the ...

Cricket »

Rumana receives T20 Team of the Year cap from ICC


Bangladesh Women's team star Rumana Ahmed received the 2018 ICC T20 Team of the Year cap from the International Cricket Council (ICC) on Sunday, according to a message sent by Bangladesh Cricket Board (BCB).Rumana is the first Bangladesh player to have been selected in the ICC squad. The right-arm leg-spinner ...

International »

Maduro vows ‘deep’ change in Venezuela government amid pressure


AP, Venezuela :Venezuela President Nicolas Maduro vowed a major shake-up in his government, a sign he is feeling pressure from U.S. sanctions and an international outcry for him to resign."I will in the coming hours announce new government methods and a profound change in the entire government of Venezuela," Maduro ...

Football »

England, France win big, Portugal held as Euro defense opens


AP, London :Big and slick wins for France and England. Not even a goal for Portugal.Even with Cristiano Ronaldo returning to the Portugal side for the first time since last year's World Cup, the European champions could only begin their title defense with a 0-0 home draw against Ukraine.The goals ...

Sports »

Serena survives scare to advance in Miami


AFP, Miami :Serena Williams survived an "irresponsible" second set lapse on Friday to see off Sweden's Rebecca Peterson 6-3, 1-6, 6-1 in her second-round opener of the WTA and ATP Miami Open."I wasn't really happy with my performance," admitted the 23-time Grand Slam champion, who is playing in just her ...

Entertainment »

I was lucky that it wasn't a dance-off - Alia Bhatt


An Abhishek Varman directorial, Kalank starring Alia Bhatt, Madhuri Dixit, Varun Dhawan, Aditya Roy Kapur, Sonakshi Sinha, and Sanjay Dutt has been making headlines ever since its announcement. It was just yesterday when the makers of the film dropped in the first song, titled Gharore pardesiya, featuring Alia and Madhuri ...

International »

Pope replaces Santiago bishop after abuse cover-up claims


Reuters, Vatican City :Pope Francis has accepted the resignation of Cardinal Ricardo Ezzati, the archbishop of Santiago and the highest ranking member of the Catholic Church in Chile, who has been caught up in the country's sex abuse scandal.A Vatican statement on Saturday said the pope had named Bishop Celestino ...

International »

May makes final push for Brexit deal with new timetable


Prime Minister Theresa May returns to Britain on Friday vowing to make "every effort" to win over MPs opposed to her EU divorce deal, hours after securing a delay to Brexit from European leaders in Brussels.The embattled premier faces daunting odds to persuade recalcitrant British lawmakers to back a plan ...

City »

Gonoforum President Dr. Kamal Hossain speaking at a press conference organised by Gonoforum at the Jatiya Press Club on Saturday demanding safe road.


Editorial »

Modernise the railways and make it corruption-free


BANGLADESH Railway has been showing less importance and interest to recover its grabbed lands though thousands of acres of land are now illegally possessed by a section of influential people and some organisations. It has also no visible plan to use many unused lands across the country too. An initiative ...

Editorial »

Save Halda from dying


DEPARTMENT of Environment has revealed that waste from a housing estate and some factories are polluting the Halda river in Chattogram to the extent that it caused dying of fish. Currently, the pollution of the Halda is severely affecting the livelihood of adjacent people, in particular the fishermen. In June ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news