The Euro and European Monetary Policy: A Critical View

Abstract

The fiat money production and European Union’s monetary integration is considered to be a big leap in the integration process. The introduction of Euro and the centralization of fiat-money production by European Central Bank was considered to generate many benefits for Single Market, European citizens or business sector. Monetary integration and accession to Euro was linked to specific nominal convergence criteria and became compulsory for any new member. The history of Euro creation and adoption by majority of EU countries was not an easy one. The evolution of the Euro Zone after the introduction of a single currency was not merely positive. The introduction of the Euro was followed later by a significant enlargement, including Eastern European Countries (EEC), thus creating a European Union with “different speeds”. The current bailouts of various banks exposed to the Greek or the Cyprus crisis and the constant quantitative easing that significantly expanded the existing broad money (denominated in Euro) emphasize the fiat money features of this currency and the tragedy of commons surrounding this important project for European Union.