The Challenge of a Single Currency for Europe
The purpose of this essay is to examine the many challenges that confront the European Union (EU) in the aftermath of its adoption of a single currency unit, the euro. A brief review of the history of the development of the EU will be provided to establish the background in which the EU developed a single current. The challenges of such a currency regime will be analyzed with respect to trade issues, security markets and national fiscal matters. It will be argued that many problems associated with the launch of the euro remain unresolved.
As early as June 1940, BritainÆs Winston Churchill offered a proposal for a Franco-British Union to the French Government, arguing that an indissoluble union of the two countries would be ideally situated to ôrepair the devastation of war,ö to ôprovide for joint organs of defense, foreign, financial and economic policies,ö and to ôconcentrate its whole energy against the power of the enemy, no matter where the battle might be (Freymond, 1964, 6û7).ö This effort, despite its lack of success, indicates that even before World War II had ended, some European leaders were giving thought to the potential for developing a mechanism for European activity. Thus, the original impetus for the founding of what would become the EU was the desire to rebuild Europe after the disastrous events of World War II. Presented as Appendix A is a chronology of major events leading to the formation of the EU.
A key move on the path to the EC was the April 1951 Treaty establishing the European Coal and Steel Community (ECSC), which created a common market for coal and steel within the territories of its six-member states: Belgium, France, the German Federal Republic, Italy, Luxembourg, and the Netherlands (EFTA: 40 yearsà, 2000). The ECSC was proposed by Robert Schuman, the French Foreign Minister, on May 9, 1950. Schuman (2003, p. 1) summarized his...