The Euro –the common currency of 19 EU member states- has been the main pillar to a deeper integration in terms of easier transactions, easier trade and more effective development and growth throughout the Eurozone. However since the crisis of 2008 Eurozone has been stacked. Even though in January 2017 there were some encouraging indicators for the Eurozone as a whole; the unemployment has fallen below 10% for the first time since 2009 and the inflation has reached 1.8%. This average does not represent the whole reality. Unfortunately, as it always did.
The common currency is the last step of the Economic & Monetary Union (EMU) which was established in 1999 following the Amsterdam Treaty establishes the completion of the EMU as a formal objective and sets a number of economic convergence criteria, concerning the inflation rate, public finances, interest rates and exchange rate stability. Members of the EMU are both the Eurozone countries and the non-Euro EU countries.
Initially the Euro has been created in order to boost economic integration and partnership between the Euro user countries, to strengthen the Eurozone economies against the pressure of the global money markets and boost growth and development of each economy of its members. And those first steps have been the causes that drove the Eurozone into a spiral of deflation and zero growth. Eurozone has been aiming at integration and partnership. However there was never an effective centralized planning or even a centralized economic governing. Eurogroup as a non official body of the Union has failed in many ways to unite the member the states and make them truly converge. Unfortunately Eurogroup has showed up to take up responsibilities when the crisis had already expanded enough to be irreversible. Even now Eurogroup is not a forum to help the Eurozone to overcome the crisis a whole but is a bargain place where the leverage of the national interests triggers self distractive approaches of the problem.
The rescue programmes that have been established are ad-hoc, different for each country but in the same time not tailored for each case and not centralized coordinated. There is no Eurozone-wide rescue programme and this is the greatest weakness of the Euro. It is a weakness towards the global markets. In a potential currency war Euro the ECB is not likely to react that fast due to collision of interests of the Eurozone members.
In the first years of the common currency use between 2001 and 2007 the countries have taken advantage of the pro-cyclical character of the Euro. This pro-cyclical character had helped the Eurozone countries to improve their economic indicators and their economies to grow. The ECB has been strict with the deflation percentage of 2% to be kept as a common economic policy by the states but in the same time the ECB had not had the same strict and meticulous attitude towards the states whose percentage of debt in comparison with the GDP was above 60%. This has been almost fatal.
However the Eurozone and the members states have taken this situation for granted and did not focus on long-term measures and policies that would have prevent the situation we are experiencing today. When the money cycle has been interrupted by the global financial crisis in 2008 Eurozone and the EU have not been ready to face the crisis that occurred. After 2008 the pro-cyclical character of the Euro has been reversed from boosting the economies to sinking them deeper than they would be if there was no Euro. The pro-cyclical character extends the cycle of an economy further than it would be either upwards either downwards. No establishment of long-term measures and investments but also lack of deeper cooperation has led us here.
But nothing seems to be getting towards the solution but Eurozone is going the exact opposite direction. Populist politicians throughout Europe are unable to discuss any realistic plan for Eurozone to overcome this standstill. And it is not just about a currency. It's about the last stage of the economic integration of the whole European Union. And it's being questioned. By the angry people and the unskilled politicians. And the people get more and more angry because of the unskilled politicians. And the unskilled politicians are trying to use populism as a painkiller to the damage they caused initially. Greece, Italy, France, Finland are only some of the countries where not only the Eurozone but the European idea as a whole is collapsing piece by piece.