What is Wrong with the Euro?
date: September 5, 2012
location: Villa Sassetti

"What is wrong with the Euro?" Robert D´Alimonte opened his talk on Wednesday evening with his answer: "It´s a currency without a state". Tracing the history of European integration from the Schuman Plan to today, D´Alimonte illustrated the political motivations that drove the adoption of the Euro and the abandonment of the flexible exchange rate system of national European currencies. "It was not a matter of economic rationality", he said, "but, rather, a matter of war and peace." The Euro was seen as a tool to consolidate European unification and to force deeper cooperation among member states. It served, fundamentally, as a guarantee that Europe would never again be divided as it so tragically had been in the past. The political rationale was strong. But the economic rationale? 

D´Alimonte pointed to a growing division between more resilient Northern European economies and struggling Southern European economies as the main factor that threatens to undermine the common currency. In the face of the global economic crisis, is the political will, D´Alimonte asked, still strong enough to save it? European political leaders have no choice but to find the political will, he argued, because "leaving the Euro means choosing not to make the structural changes necessary to boost productivity and to drive economic growth in the long term". The collapse of the Euro would have serious consequences. A Europe-wide debate on the future of the Euro, and the European Union, is necessary, he concluded, to generate a public consensus that can help steel the resolve of political leaders to act.