20-year-old euro faces choice

For a person, 20 years old is a good time for fresh clothes, and feels a lot of adolescent troubles. But for the 20-year-old euro, the challenges encountered are much greater, and they have to face the Hamlet-style suffering choice of “survival or destruction.”

In fact, since 1999, officially the currency that was first issued by the state in history, the euro has been subject to various doubts. Its previous performance has exceeded most people’s expectations, and now the euro faces a cross-border “enemy” challenge, the populism that has emerged in Europe in recent years.

Although populism is still the most vague concept in political science, it does not affect its popularity in Europe in recent years.

Populism has gradually risen in Europe from the beginning of this century, but its impact is limited. After the global financial crisis in 2008, especially after the Eurozone sovereign debt crisis in 2010, the UK’s “Brexit” and 2017 right-wing forces in 2016 achieved breakthroughs in a series of European elections, marking the peak of European populist forces. On the political front, populists in European countries often take the EU as a target, and on the economic front, populist forces oppose the euro as the best entry point to meet the confidence of the people.

The rise of European populism is a contradiction between the interests of European people in the EU and the uneven distribution of interests among European strata and EU countries. After 20 years of development, the support rate of populist parties in Europe has tripled. Currently, one out of every four Europeans supports populism, and populist party leaders have held important positions in 11 European governments. European middle-class and below workers suffered from income or welfare declines and unemployment after the global financial crisis. Dissatisfaction with globalization made them more likely to become the mass base for the rise of populism. Many middle and lower classes, under the impetus of a combination of immigration issues, economic insecurity and cultural conservatism, partially accepted the idea that populism is the hope of changing the status quo. But those who are accustomed to using the euro, if they are not bad, should remember that the emergence of the euro 20 years ago also bears the hope of changing the status quo. At that time, people believed that a single currency could bring prosperity and consolidate European unity.

As the protagonist of the cross-sovereign currency experiment that began 20 years ago, the euro is destined to leave a shadow in the history of human currency. The euro is now the currency used by the EU’s 19 countries and 330 million people. In terms of currency size, the euro’s total cash value exceeds the US dollar, making it the world’s largest single currency. The euro is a currency tool for the EU to promote deep integration, but in turn has become a scapegoat for the EU, and more and more voices have withdrawn from the euro zone.

In fact, the euro has not suffered a blow. For example, in 2011, under the pressure of the market, the euro once faced a crisis of collapse. In addition, in the European debt crisis, Greece’s default risk was once close to the country’s “expulsion” out of the euro zone. Former Greek Finance Minister Yanis Varoufakis compared the EU and the International Monetary Fund’s pressure on the Cyprus government in 2013 to a “coup”. In his view, the European Union’s subsequent financial and economic pressure on Greece and its success in forcing its policy reversal were exactly the same. However, the current situation is different. Before the euro was passively impacted, the current dissatisfaction with the euro came from within. The various sectarian parties were reluctant to accept the constraints of common fiscal and monetary policies, describing the euro as a heavy “currency.” shackles”.

In fact, the euro has been trying to resist the erosion of populism. For example, the euro banknotes do not bear the head of the characters like most currencies, but the much more neutral bridges and buildings. But this move did not allow populist forces to fall in love with the euro, from the “five-star movement” in Italy to the “national league” in France. Driven by populism, European countries have more and more complaints about the euro. Italian Prime Minister Conte also pointed the finger at the Davos Forum in January. He said that although some Europeans had expected the euro, the situation changed after the euro was actually used. “The price of stability is a growing public debt.” In their view, joining the euro limits certain freedoms that member states manage their economies. Member states are constrained by the fiscal deficit ceiling and cannot stimulate the economy or raise inflation through currency depreciation. It is difficult to get through the debt.

The populist forces opened fire on the euro, and destructiveness will gradually emerge in the next three months. The European Parliament elections in May this year were a big test of populism and directly related to the prospects of the euro. If the populist forces win, then the euro may not have another birthday of the next decade. Because both the left-wing populist and the right-wing populist, both camps promised to return sovereignty to their home country, and the currency distribution rights were taken back from the European Central Bank in Frankfurt and returned to the central bank.

The re-emergence of currency rights by all countries means that the euro has disappeared. In response, the European Central Bank, which is responsible for the euro issuance, has long been keenly aware of this. In its Financial Stability Review, the agency said the political risks in the entire euro zone are increasing and the implementation of fiscal and structural reforms. Form a challenge. The rise of European populist parties has made it difficult for the EU to support the implementation of orthodox economic reforms, which has a negative impact on economic stability. “This may put new pressure on the more vulnerable sovereign states and may lead to a new split in the euro zone,” the report said.

In the EU’s view, the best way to avoid splitting and coping with the challenges of the populist forces is to make the euro stronger. The EU is planning to strengthen the use of the euro in strategic sectors such as energy, commodities and aircraft manufacturing to challenge the dollar as the world’s reserve currency. At the end of last year, the European Commission announced a plan to promote the euro to play a “more powerful international role”, calling for increased political pressure, demanding energy contracts in euros, and advocating the introduction of euro-denominated financial transactions into the registration platform. And encourage the development of the EU payment system. The EU believes that promoting the global use of the euro reflects the “political, economic and financial weight” of the euro zone in this increasingly multipolar world. In addition, the outgoing European Commission President Juncker said in his last speech address that the euro must become an active tool for sovereign new Europe.

However, from the current situation, the 20-year-old euro is far away from becoming an “active tool” and closer to the European Parliament elections in May. In the election, if the populist party fails to gain a greater voice, then the result will be the best birthday present for the euro. On the contrary, the euro will be hit hard. Ironically, the UK, which has always contradicted the euro and sought to leave the EU, will become an attractive asset haven.