The euro is celebrating its first twenty years as a success but also in the awareness that much remains to be done. The overwhelming majority of European citizens consider the single currency a part of their identity and view it favorably; surely, the introduction of the euro simplified economic and commercial activities. Yet, not to be underestimated is the problem it created, particularly for a country like Italy, by eliminating the possibility of using exchange rates as a competitive devaluation tool.
The history of the European currency is therefore also that of a group of national economies that has still not yet achieved the convergence expected to come with the launch of the euro. The core of the common currency’s problem is its nature as a currency devoid of the support of a common European fiscal and economic policy. This situation underscores the substantial disparity with the dollar, which is bolstered not only by the global mandate of the Federal Reserve, but also and above all of a federal treasury with a single government bonds market.
Nevertheless, after the errors of the sovereign debt crisis caused by the lack of the solidarity that should underpin the European project, the Monetary Union launched a new plan for cohesion. Initially, with important ECB interventions in the spirit of “whatever it takes”, and now with a Next Generation EU recovery package founded on the issuance of common debt, a proposal to which Italy has always lent its support.
Eurobonds that finance the recovery plans of the various Member States are shared undertakings that, while circumscribed in aims and timeframes, surely represent a substantial step forward. It is now up to European policy-makers to decide whether to continue to pursue this path. Thus, 2022 promises to be a crucial year, just as 2002 was with the birth of the common currency and 1992 when the EU’s foundations were laid with the Treaty of Maastricht.
The Union will be called upon to decide on the future of the Stability Pact and on a new regulatory framework, establishing whether Europe must revive austerity policies or advance toward greater economic and fiscal integration. This latter would certainly be the main route to confronting the many issues still pending in the construction of the European project, strengthening the euro’s global role and facilitating the fitting representation of the economic and industrial power of the area that adopted it twenty years ago.