The euro (sign: €; code: EUR) is the official currency of the eurozone, which consists of 18 of the 27 member states of the European Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
- Part of the reason for the relatively subdued profile of the new Germany has been the cost of reunification itself, for which the bill to date has come to more than a trillion dollars, saddling the country for years with stagnation, high unemployment and mounting public debt. France, though no greyhound itself, consistently outpaced Germany, posting faster rates of growth for a full decade from 1994 to 2004, with more than double its increase in GDP in the first five years of the new century. In 2006, substantial German recovery finally arrived, and the tables have been turned. Currently the world’s leading exporter, Germany now looks as if it might be about to exercise once again something like the economic dominance of Europe it enjoyed in the days of Schmidt and the early Kohl. Then it was the tight money policies of the Bundesbank that held its neighbours by the throat. With the euro, that form of pressure has gone. What threatens to replace it is the remarkable wage repression on which German recovery has been based. Between 1998 and 2006, unit labour costs in Germany actually fell – a staggering feat: real wages declined for seven straight years – while they rose some 15 per cent in France and Britain, and between 25 and 35 per cent in Spain, Italy, Portugal and Greece. With devaluation now barred, the Mediterranean countries are suffering a drastic loss of competitiveness that augurs ill for the whole southern tier of the EU. Harsher forms of German power, pulsing through the market rather than issuing from the high command or central bank, may lie in store. It is too soon to write off a regional Grossmacht.
- Perry Anderson, "Depicting Europe", London Review of Books (20 September 2007)
- The most likely scenario is that EMU (Economic and Monetary Union of the European Union) will occur but will neither end Europe’s currency troubles nor solve its prosperity problems.
- Once Italy is in, with an appreciated currency, the country will soon be back on the ropes, just as in 1992, when the currency came under attack.
- The most serious criticism of EMU is that by abandoning exchange rate adjustments it transfers to the labor market the task of adjusting for competitiveness and relative prices... losses in output and employment (and pressure on the European central bank to inflate) will predominate.
- Italians dream that the ECB (European Central Bank) will make their life easier than the Bundesbank does now... The new central bank is certain to establish itself at the outset as a direct continuation of the German central bank.
- If there was ever a bad idea, EMU it is.
- Instead of increasing intra-European harmony and global peace, the shift to EMU and the political integration that would follow it would be more likely to lead to increased conflicts within Europe.
- Although 50 years of European peace since the end of World War II may augur well for the future, it must be remembered that there were also more than 50 year of peace between the Congress of Vienna and the Franco-Prussian War. Moreover, contrary to the hopes and assumptions of Jean Monnet and other advocates of European integration, the devastating American Civil War shows that a formal political union is no guarantee against an intra-European war.
- What is clear is that a French aspiration for equality and a German expectation of hegemony are not consistent.
- A critical feature of the EU(European Union) in general and EMU in particular is that there is no legitimate way for a member to withdraw... The American experience with the secession of the South may contain some lessons about the danger of a treaty or constitution that has no exits.
- What has happened, it turns out, is that by going on the euro, Spain and Italy in effect reduced themselves to the status of Third World countries that have to borrow in someone else’s currency, with all the loss of flexibility that implies.
- EMU wasn't designed to make everyone happy. It was designed to keep Germany happy - to provide the kind of stern anti-inflationary discipline that everyone knew Germany had always wanted and would always want in future.
- The clear and present danger is, instead, that Europe will turn Japanese: that it will slip inexorably into deflation, that by the time the central bankers finally decide to loosen up it will be too late.
- The idea that the euro has "failed" is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.
- Moving to a full monetary union in Europe is like putting the cart before the horse. A major shock would result in unbearable pressure within the Union because of limited labour mobility, inadequate fiscal redistribution, and a ECB(European Central Bank) that will probably want to keep monetary conditions tight in order to make the euro as strong as the dollar. This is surely the prescription for major future problems.
- Dominick Salvatore, "The common unresolved problems within EMS and the EMU", American Economic Review, vol. 87, n. 2, pp. 224-226