De Silguy: ‘Decline in purchasing power is not the euro’s fault’

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“The idea that the decline in consumers’ purchasing power is a result of the euro is a myth,” argued former EU Commissioner for Economic and Monetary Affairs Yves-Thibault de Silguy in an interview with EURACTIV France, expressing his belief that the single currency had been well received by the general public and by the French in particular.

De Silguy, who served in the EU executive at the time of the euro’s launch, offered his verdict of the euro’s performance in European markets after its first ten years. De Silguy, who is now president of Vinci, a construction group, argues that the single currency and the European Central Bank have allowed Europe to manage durable exchange rates. 

A decade after its creation, the former commissioner believes the euro has achieved the objectives it had been set, namely by allowing the internal market to function properly. Moreover, he stresses the protective role that the euro has played, particularly in times of turmoil. He recalls the 1995 Mexican peso crisis, which led to a sudden depreciation of vulnerable European currencies, including the Italian lira and the Spanish peseta. 

Expressing his belief that the eurozone countries are currently better protected from the current economic and financial crises than those EU members that remain outside the single currency, he adds that a strong euro vis-à-vis the dollar is advantageous for the European economy. “I do not believe for one moment that we can direct the exchange rates of the currencies,” he further indicated. 

Regarding the currency’s future, he is firmly opposed to softening its entry rules. “Everyone has to respect the same conditions of entry,” he said, stressing that easing the rules could call into question the euro’s credibility in the international arena. 

De Silguy also defends the Stability and Growth Pact, which he believes will continue to do its job in the future. “Today, the problem is that Europe is not succeeding in reducing its deficits,” he explained. “Contrary to popular belief, public deficits do not stimulate growth,” he added. 

The former EU official believes member states are finally starting to respect the “major economic policy orientations” adopted by the Spring European Council and “forgotten” a few months later during the preparation of national budgets. 

To read the interview in full on the EURACTIV France website, please click here.

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