The Euro. How the common currency threatens the future of Europe
On 5 October, the Rafael del Pino Foundation organised the Keynote Lecture by Joseph E. Stiglitz "The Euro. How the common currency threatens the future of Europe" on the occasion of the presentation of his latest book of the same title.
Joseph E. Stiglitz, winner of the 2001 Nobel Prize in Economics.
Professor Stiglitz is currently Professor of Economics at Columbia University after an intense and prolific academic career at prestigious universities such as Yale, Oxford and Stanford. He is the recipient of the John Bates Clark Medal (1979) and the Nobel Prize in Economics (2001). He has also served as an economic advisor to the Clinton administration and as chief economist and senior vice president of the World Bank. He is the author of works of great media impact, such as the international bestseller "The Globalisation Malaise" and "How to Make Globalisation Work", which he presented at the Foundation on 7 November 2006.
Professor Stiglitz visits us again to give us his views on the Euro. In 1992 the European Union proposed the project of implementing a single currency, which ten years later was already a reality and is today shared by the 19 states that make up the Eurozone. In his latest book, entitled "The Euro: How the Common Currency Threatens Europe's Future" (Taurus), Joseph Stiglitz argues that "while the benefits of continuing with the euro are limited, the costs, including continued economic stagnation and depression, are immense".
We have invited the former Vice-President and Commissioner for Competition of the European Commission, Joaquín Almunia, to a dialogue with Professor Stiglitz, a dialogue that will be moderated by Jose Ignacio Torreblanca, Opinion Editor of the newspaper El País.
On 5 October, the Rafael del Pino Foundation hosted a debate between Joseph Stiglitz, Professor of Economics at Columbia University and winner of the Nobel Prize for Economics, and Joaquín Almunia, former European Commissioner for Economic and Monetary Affairs, on the euro and the future of Europe. Stiglitz explained that US economists view the European monetary union as an experiment and wonder how the Europeans could have done such a thing, which makes no sense. American scepticism has two perspectives. Right-wing economists believe that markets need flexibility and that the euro is, in this sense, a throwback to the 1970s, when markets were more rigid. Left-wing economists, on the other hand, look at the consequences of its implementation in the form of unemployment, etc. Almunia argued that the euro was not an improvised idea, but that it had been around for many years, because in order to make progress in European integration it was necessary to make progress in monetary integration. Furthermore, he explained that the euro is not an experiment, but a political fact of the first magnitude derived from the fall of the Berlin Wall and the subsequent German reunification. Stiglitz defended his position by arguing that it is unusual for economies to stagnate for eight years, as is the case in the euro area, due to the rigidity of policies and adjustment mechanisms and the weaknesses of the euro's institutional design, which he described as a systemic failure. He also criticised the European Central Bank's sole focus on price stability, in contrast to the US Federal Reserve, which must also pay attention to economic growth and employment. He therefore criticised the ECB's monetary policy during the crisis. For his part, Almunia again criticised this position, arguing that problems such as the imbalances in the United States or China or the problems arising from financial deregulation in the United States and the United Kingdom, which are at the root of the crisis, are not attributable to the euro area. And he recalled that the European treaties indicate that, once price stability has been achieved, the ECB must attend to the other objectives of monetary policy, as shown by the fact that it is applying the quantitative easing measures also taken by the Federal Reserve and the Bank of England. The balance of payments surplus was another of the arguments against the euro put forward by Stiglitz because, he explained, this surplus is produced at the expense of deficits in other countries. This is another element that explains the euro's problems, which should be corrected by raising wages and prices in Germany because this imbalance causes a lot of pain in other euro member countries. Almunia agreed with him and indicated that the reduction of the German surplus will not deteriorate its export competitiveness. Stiglitz insisted on the institutional weaknesses of the euro architecture, which, in his opinion, aggravated the crisis. Almunia acknowledged that the role of the financial system had been forgotten in all this and that when issues such as single supervision were discussed before the crisis, ministers always said that this was a matter for individual countries, not the EU. Finally, Stiglitz linked the euro to the rise of populism in the European Union, derived from the harshness of the crisis caused by the monetary union itself. Almunia replied that the euro does not explain the rise of populism in the United Kingdom, which does not belong to the single currency, or in the United States, the reasons being different.
The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio González, are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of the authors.
The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio J. González, are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.