Reflections on the Euro.

• Author: Schonberg, Stefan
• Position: LETTERS TO THE EDITOR - Letter to the editor

The Winter 2014 TIE offered a bundle of quite interesting commentaries from top policymakers, academics, and market operators. What I found characteristics was the it was left to a representative of a European non-euro country, Miroslav Singer of the Czech National Bank, to ask the unwelcome but most relevant question about whether the promises made by the creators of the euro to the European public in terms of increased welfare and harmony in Europe have been fulfilled. Obviously, they haven't.

Nonetheless, the contributions from many eurozone commentators in "Improving the Euro" create the impression that if only EMU had been constructed in a way that would have prevented the present crisis, then everything would be fine. It wouldn't, however. The euro may constitute a "landmark in European integration" according to former European Central Bank board member Jorg Asmussen, but progress toward integration shouldn't be considered as an end in itself. Soon after its inception in 1999 and prior to the present crisis, the eurozone became the slowest growing economic area in the world, as its benefits--no exchange rate risks, lower transaction costs, increased price transparency, and so on--were overestimated and overstated, while its drawbacks--different national political, social, and cultural priorities which can't be removed by "better rules"--were underestimated and understated. Besides, other economic areas in the world are proving that you can thrive without a common currency.

The euro's history up to now confirms what we know about other monetary unions of the past: They didn't work without a proper political union. But a political union in Europe is not in sight, as the forthcoming European elections on May 25 are set to confirm. Therefore, even when the euro crisis is...