January 1 marks the 20th anniversary of the creation of the euro. Currency applies to securities markets and portfolios and survives a major crisis, but it seems destined to be a fragile giant who is unable to achieve greater European solidarity.
First it is a virtual instrument that is only used by investors, accountants, and administrators, until it materialized on January 1, 2002, so 340 million citizens from 19 countries (euro zone) currently share the same currency.
The European Central Bank (ECB), which took monetary policy in 1999, claims to have avoided escalating prices, despite the fact that the image of the euro inflation is still like a sign on his skin.
However, the popularity of the euro is at its highest level. On average 74% of eurozone citizens believe that a single currency has benefited the European Union (EU) and 64% for their own country, according to a survey published in November by the ECB, and this happened at the same time when anti-EU populist movements gained land on all parts of the continent.
"The euro anchors in the population, even those who oppose the system must recognize it," as happened recently in Italy, said Nicolas Véron, an economist at the Bruegel institute in Brussels and Peterson in the United States.
The euro has also encouraged inter-community trade, and is the second most used currency in the world, even though it is far behind the US dollar.
Deficiencies and divisions
But in the middle of the 2012 boreal, the young history of the single currency was almost cut off and dragged down by the sovereign debt crisis which threatened to shift the banking system.
This event reveals the original shortcomings of this currency: lack of budget solidarity due to mutualisation of debt, investment and, therefore, the risk of a deep gap between the eurozone economies, in the absence of lenders as a last resort for countries in trouble, etc.
With the Greek crisis, in particular, as a backdrop, "the euro has triggered mutual reproach, for its share of southern Latin countries attacked north by its ordoliberalism (the flow of economic thought linked to the market economy, developed decades ago in Germany), and in the other side of the people from north to Latin for their weaknesses, "said Eric Dor, director of economic studies at IESEG (international trade school).
Mario Draghi, ECB president, will succeed in putting out the fire in the summer of 2012, stressing that his agency will do "everything possible to save the euro".
Since then, the ECB has a program to buy, under certain conditions, an unlimited amount of debt from a country attacked in the market. Weapons of discontent up to that point have never been used but it serves to restore calm.
And, to stop the specter of deflation, considered toxic to the economy, the ECB has taken unprecedented action, taking interest rates to the lowest level and buying most public debt from 2015 to 2018, with a total amount of 2.6 billion euros.
However, at the political level, little or nothing is done to correct currency defaults. 19 countries still do not have the tools to improve the development gap or invest in facing economic challenges.
From clay to brick
In the 1990s, "the most important thing in Europe was, at the economic level, to provide a single market with a single currency to end the significant changes in exchange rates (currencies) of member countries, and at the political level, to bring Germany reunited to Western Europe, "according to Gilles Moec, an economist at Bank of America Merrill Lynch and former Bank of France official.
Although this argument was sufficient at that time to "sell" the euro to the population, since then the building has not been able to consolidate.
According to the "minimum" of euro area reforms announced in December 2018, 19 member countries only reached agreement on very limited budget instruments.
The boldest idea – the finance minister for the euro zone, or the establishment of the European Monetary Fund, among others – has been dumped in the last 18 months of negotiations.
For its part, "the ECB has lived a little" after stabilizing the currency and banking system, warned Moec.
On the other hand, economist Nicolás Véron is more optimistic. For him, with banking sanitation, public debt, and the ECB's actions, the euro is now a "giant with brick feet rather than clay."