The ten-year-old euro has stood the test in the financial crisis

A conference with this title, led by Wolfgang Quaisser, took place at the Tutzing Academy for Political Education from 13 to 15 February 2009 Some of the presentations are documented in this issue. Joachim Starbatty, University of Tübingen and Action Group for a Social Market Economy, points to the negative aspects of the Monetary Union. The elimination of the currency competition with the creation of the Monetary Union has not only allowed the growth rates of the member states to drift away from each other but has also intensified the inflation disparities within the EMU. The current financial crisis reveals the true character of the Monetary Union: it functions as a free reinsurance of the weak, inflationary and highly indebted EMU and EU states. Out of the promising "stability community" a "liability community" has emerged. This is because the foregoing of currency competition and realistic exchange rates makes it possible for the weak currency countries to have a standard of living and a capital accumulation for which the strong currency countries provide the resources. Jürgen Jerger, University of Regensburg and Eastern Europe Institute, Regensburg, examined the question - in the light of the current financial and economic crisis - of how desirable it is for the remaining EU countries to join the euro area. However, none of these countries currently meet the conditions of the Stability and Growth Pace so that in the near future the eurozone will not take on any new members. Theo Waigel, former Federal Minister of Finance, underlined that precisely in the difficult environment of the financial market crisis and economic recession in Europe, the Stability Pact is the suitable framework for fiscal coordination in the euro area. Without the euro the European countries would be exposed to irrational movements in the currency area. For Jürgen Stark, European Central Bank, the euro and the common European monetary polices of the past ten years have been a developed "that seemed unconceivable even for self-confessed optimists". This success is based particularly on the stability oriented currency set-up of the European Monetary Union, whose key elements are the political independence of the ECB and the declaration that price stability is a major goal. In times of crisis the euro offers security and stability. However, a rapid introduction of the euro in the non-euro countries is not advisable. This would neither be in accord with the European currency constitution nor the optimal answer to the crisis. The introduction of the euro requires structural adjustments linked with a strict convergence process. The turbulence of the past 18 months has shown that the elimination of the exchange rate as an adjustment valve that comes with joining the Monetary Union and the convergence of short-term interest rates would be too early for some EU states in the current situation. Manfred J. M. Neumann, University of Bonn, critically examines the monetary policies of the European Central Bank. Without doubt the ECB has succeeded in establishing the new common currency as a recognised world currency and has credibly pursued the goal of price stability. But the question must be raised as to whether the ECB, in the lee of the Fed, did not pursue a too expansive low interest-rate policy over the years, thus itself creating conditions that may have contributed to the origin of the current international financial market crisis.