As the euro approaches its second decade, it is time for "eurozone governments to live up to their responsibilities and fully coordinate their economic policies," argues EU Economic and Monetary Affairs Commissioner Joaquín Almunia in the autumn edition of Europe's World.
The launch of the euro was both a "decisive political gesture and a highly ambitious economic project," states Almunia. It marks the first time that "a group of sovereign nations relinquished their national currencies and committed themselves to a common economic future in peace time," remarks the commissioner. Since then, the euro area has become the "largest market in the developed world" and the currency "rivals the US dollar both as a medium for international trade and finance," he remarks.
On the other hand, Almunia admits that economic and monetary union (EMU) remains a "work in progress", noting that "we can do more to improve its functioning and reap the full potential of economic integration in terms of growth, competitiveness and jobs".
EMU also offers a unique platform to manage the new challenges of our century, including the strain that ageing populations put on national economies and social models, through "greater coordination and surveillance of budgetary and economic policies," he argues.
"Greater commitment to sound public finances would help," he reasons. Although the euro has helped to limit government deficits, he says that "public debt is still too high in some EU countries when looked at in the context of their ageing populations". To avoid overburdening future generations and to find the budgetary resources that will increase Europe's growth potential, governments should also put "more emphasis on the quality and efficiency of public finances," Almunia contends.
To compete in today's fast-moving global economy, the commissioner argues that "stronger incentives to implement structural reforms are also required". "Eurozone countries would profit immensely from driving forward liberalisation measures in the labour market, the services sector and financial markets," he argues.
More must be done if eurozone countries are to "find common positions on international issues and to speak with a single voice in the global arena," he adds, saying that "consolidated representation would allow EMU countries to wield the sort of political clout that matches both their combined economic weight and also the global status of their common currency".
"Europe now faces a time of greater uncertainty" and "we must approach the euro's second decade in a redoubled spirit of ambition, determination and cooperation," Almunia concludes.