Euro turns 25: single currency used by around 340 million people
International Economist Vicky Pryce speaks to CGTN Europe about the successes and challenges faced by the single European currency over the years of its existence.
Transcript
00:00 Let's talk now to Vicky Price, the international economist. Good to see you, Vicky. Happy New Year.
00:04 Welcome back to the programme. So if you consider the euro as something that's tied together
00:09 economies operating perhaps at different speeds, is the euro an experiment that has worked?
00:16 It seems to have done. Happy New Year to you too, by the way. So thank you very much.
00:20 Indeed, I mean, the interesting thing is you just had this clip from Greece.
00:24 What we find is that across Europe, including in Greece, the support for the euro is at the
00:28 highest it's been on record. So it survived from that point of view, despite, of course,
00:33 its ups and downs, as we've been hearing. There's no doubt that during the eurozone crisis, there
00:37 were huge question marks about whether various countries would be able to carry on being part of
00:41 the euro and also the future of the euro itself. But it has expanded from 11 members to now 20.
00:47 It now accounts for a very large part of Europe. We're talking about 340, 250 million people,
00:54 which is pretty substantial and also very substantial part of international trade is
00:59 now denominated in the euro by 20 percent. So it's the second, in fact, reserve currency
01:06 after the US dollar. So you could say from that point of view, it has endured, but it has had to
01:12 have a number of changes because it learned a lot from the eurozone crisis. It wasn't perfect. It
01:17 still isn't, frankly. Quite a lot more needs to be done. But it had to rethink its institutions.
01:23 It had to rethink the role of the European Central Bank. It had to rethink the way in which
01:27 it supported countries. It dealt Greece and others, you know, it dealt with them anyway in a
01:33 very harsh way. And that has now been relaxed quite significantly. The one other aspect of the
01:40 whole panoply, if you like, of what it was using, which is a stability and growth pact, which was
01:46 limiting countries to three percent deficit GDP ratio and 60 percent debt to GDP ratio,
01:51 which many countries couldn't keep, was in fact something like, you know, perhaps around the
01:57 throats of various countries, which was strangling them in a way. And that's been abandoned for the
02:01 time being, although it will come in a different form. So they had to learn, particularly, I think,
02:06 the role of the European Central Bank as a single regulator for the bigger banks was a very,
02:12 very significant step forward. And you said there that you think more needs to be done to improve
02:18 the euro. What do you think does need to be done? We still don't have a proper banking union. For
02:24 example, one small thing which perhaps matters quite a lot for individuals is the fact that
02:29 there isn't a common deposit insurance scheme across Europe, across the eurozone. Each country
02:36 does its own thing, even though they tend to have the same figure that they guarantee. But
02:40 nevertheless, it means that if there is a real problem, then there isn't going to be support
02:44 from other countries coming in to support what may be happening in one particular area within
02:50 the eurozone. So that's one. We still don't have a capital markets union. That would make such a
02:55 big difference in terms of raising funds and also lowering costs of doing business, frankly, and
03:00 enterprises being able to fund what it is that they want to do in terms of expansion.
03:07 We don't have that. We have different regulations still in the pensions industry. So we are a long
03:13 way from the whole region, if you like, the whole eurozone region being a single market from a
03:19 financial point of view. You have it in terms of movements of goods, movements of services more
03:24 generally, although obviously the financial sector is part of that. It's not perfect by any means,
03:28 as I was saying. People can move around, of course, very easily. But you still have an
03:32 established capital movement as easily as you'd like it. But by eliminating the exchange rate risk,
03:38 of course, you've come a lot closer to having a proper single market than would otherwise be the
03:43 case with the existence of the euro.