I was in a class taught by a German professor once. At the beginning of the course on European Union history he held up a Euro coin and asked the class what it was. Fellow classmates answered “Currency,” or “Cooperation,” or “Unity” or other similar feelings. These answers were close, but what the professor was getting at is the Euro is a miracle. This was in 2004 and the EU had just expanded from 14 to 24 members. Having a single currency (and thus a single monetary policy) shared by the majority of the members was considered by many to be nothing short of a full-fledged miracle. Now the EU has 27 member nations, 17 of whom use the Euro. Most of the rest will eventually switch over to the Euro once they meet the Eurozone criteria.
However with so many nations using a single currency, there is bound to be problems with integration and implementing a single monetary policy. The difficulty is compounded by the fact that there are nearly as many types of economies as member states. Some members are net importers while others are net exporters. These divergent economies make it difficult to come up with a single strategy and the European Central Bank has had to play a much bigger role in stepping in to preserve economic union. This is the latest move by the ECB to forestall a European-wide economic collapse. However the debt crises in Greece and Portugal are still fresh in European investors’ minds.
So how exactly has the Euro been effective? Well, for starters, only very recently has anyone (in this case Greece) even considered the possibility of leaving Club Euro. For all the anti-Euro sentiment, members of the Eurozone remain fiercely committed to the idea of a Europe united through currency. The Chancellor of Germany, Angela Merkel, spearheaded the Greek bail-out plan as part of an effort to stabilize the Euro.
Sixty years ago, if you had asked a German or a French or a Greek if there would be political unity in Europe you would have been laughed back to this century. The French and Germans had just finished battling each other for the third time in 150 years, and the whole of Europe was coming to grips with the loss of an entire generation of young men. From this tragedy, the French and the Germans decided to do the only thing they could to avoid war; they decided to share the resources of war – coal and steel. From this European Coal and Steel Community grew the idea of a United States of Europe. And the way these Europeans chose to lay down the foundations of political unity was with economic unity. A political union would grow from economic, monetary, and fiscal unity. Indeed, in the face of reverting to nationalistic solutions, members of the Eurozone have instead chosen to pick themselves up and to unite politically to preserve the economy.