The Blessing of Having the Euro and the Need to Make it Better

Something extraordinary has happened during the Global Crisis that started in 2007. Despite acute financial turmoil and massive injections of liquidity, exchange rates in the euro area have not faced the kind of speculative attacks that were the unavoidable feature of every previous crisis. The reason, of course, is that there are no exchange rates. This silent triumph of the monetary union is almost taken for granted because it is almost a tautology. It is much more than a tautology. In fact, it is the raison d’être of the monetary union. Member countries have given up their currencies, a powerful symbol of statehood, and their monetary policy autonomy for one major purpose: achieving exchange rate stability within the Single Market. In contrast, most of the EU countries that have not joined the monetary union have undergone heavy market pressure