The European Central Bank and the Euro: The First Year

We are meeting today to commemorate the first anniversary of the creation of the euro, a remarkable and unprecedented event in economic and political history: the creation of a supernational currency that will, when it is fully implemented 2 years from now, leave the major nations of Europe without any currencies of their own. Never before has a major country not had its own currency. I say that we are here to commemorate rather than to celebrate this first birthday of the euro because I believe that the creation of the euro and of the European Economic and Monetary Union is at best an act of uncertain merit. As I have noted before, the euro is likely to have adverse medium-term and long-term effects on employment and inflation, and is likely to be the source of political conflicts within Europe and between Europe and the United States. If I am correct, this is certainly not a cause for celebration. But whether it is for better or for worse, the introduction of the euro and its survival are remarkable events. There were many skeptics who thought it could not come into being. But in the end, Germany agreed to abandon its own beloved currency in