5 Years of the Euro

At the beginning of next year, just 3 months away, the Euro will be 5 years old. Evaluations are beginning to be made, and euologies penned. No everyone will be telling it like it is. Euro has brought stability but not growth, says Commissioner

This was the message delivered by Economics and Monetary Affairs Commissioner Joaquin Almunia at a conference in Amsterdam today (11 October) to assess the euro's first five years. "Overall, EMU [economic and monetary union] has succeeded in delivering macroeconomic stability, but it has not yet delivered economic dynamism", said Mr Almunia. He blamed the lack of dynamism on the inflexibility of the euro zone's product and labour markets.

The message about lack of flexibility is being repeated so often nowadays that if it continues, I am almost expecting some action. Well maybe in three or four years from now. On the stability side, well an economy has to be a complete basket case not to be stable when running at such a slow speed.

Dutch finance minister Gerrit Zalm said that the euro had brought lower interest rates and had ensured price stability but had removed some economic control from governments, according to AP.

It has certainly brought lower interest rates to much of Europe but I'm not sure the Irish would agree with the price stability bit. Besides, when economies are growing slowly, interest rates are normally lowered. It could be argued that the Euro zones fabled low interest rates are simply the flip side of its low growth. Now for price stability: From Economic Quarterly,

Inflation dispersion and inflation differentials (with respect to German inflation) within the Euro area have increased since countries lost monetary independence and were no longer required to attain inflation convergence.

So perhaps our Dutch friend was mistaken.

Additionally, the variability of the inflation differential with respect to German inflation has tended to increase for most countries since the Euro was adopted.

No stability here. As a tourist, I have found the Euro to be a great help, most of the other tests seem to have been failed.