Satisfied or dissatisfied? ” “

An assessment of the pros and cons of the introduction of the euro in Europe is made for SirEurope by Juan Velarde Fuertes , professor of Spanish economics at the Complutense University in Madrid. A year after the introduction of the euro, what are its positive effects? “The most important of the positive effects are twofold: the first is the fact that, automatically, in a moment of crisis of the business cycle, the entry into force of the single currency produced a strong impact on the production system, as a result of which this crisis was not so deep as it might otherwise have been; the second effect is that in this phase the monetary policy conducted by the various countries has gained in autonomy and may thus be far better adjusted to the overall trend of European economic life”. And what are its negative effects? “Within the mechanisms of Europe’s economic leadership, the negative effects especially concern the role of Germany, which exerts a special influence in the continent. In the past, already in the old European monetary system, a deutsch-mark area had been created. In the present phase, following the introduction of the euro, Germany risks transmitting her problems of economic policy with far greater force to the other European countries. In some sense the euro is at the service of Germany. The second question is somewhat more complex: the union of the markets helps to increase competitiveness and all EU countries, to maintain their competitive edge, have had to increase their productivity. A phenomenon has automatically been produced as a result : in those sectors which do not present problems of competitiveness the workers are pressing for wage rises, and the result is that the average wage rises in each nation is higher than the average productivity”. Then there are those effects which still need to be interpreted… “Yes, the euro has become a strong currency at the world level and competes with the dollar, which has been depreciating for some time now, following the economic problems of the USA. This fact may be interpreted either in a positive or in a negative way: the positive aspect is that the euro is increasingly becoming an international reserve currency; the negative aspect is that, on the world market, this makes European products less competitive than those of non-European countries”. There have been price rises throughout Europe. And it is the poorest sections of the population that most feel their effects… “Of course, the social balance has been disturbed by the introduction of the euro, because the increase of prices, among other effects, penalizes most those on fixed incomes rather than those who have flexible earnings that can keep pace with rising prices, for example entrepreneurs. Fixed incomes, such as pensions, investments, stipends, are the most severely affected”. In sum, are Europeans satisfied or not with the euro? “In some countries the majority of the population continue to think that the old currency was better. To continue to draw comparisons between the cost of a product in the old currency and in euros is a mental effort which aggravates. People should learn to think in euros; instead, many shops continue to show the price in both currencies. A better informed part of the population by now ignores the old currency and has learned to recognize the advantages of the euro: they are satisfied with the new currency because they are convinced that if we had continued to maintain a monetary authority aimed merely at defending the old currency, the impact of inflation would probably have caused a situation of crisis”.