The euro is the most dysfunctional currency ever created

Even by his usual standards of self-satire, Jean-Claude Juncker was on top form to open the new year. As he uncorked his final bottle of wine for the year, the president of the European Commission found time to blast out a tweet celebrating the twentieth anniversary of the launch of the euro. It has, according to Juncker, become a ‘symbol of unity, sovereignty and stability’, which has delivered ‘prosperity and protection’ to the people of Europe.

Juncker was right about one thing of course. The single currency is indeed 20 this week. It was launched on January 1st, 1999, at least for financial transactions, with the actually notes and coins arriving later. And he was right as well that it has some significant achievements to its name. The trouble is, they have not involved much in the way of ‘unity’ or ‘stability’, and even less in the way of ‘prosperity’. In fact, the euro has managed four milestones which most mainstream economists might have previously considered virtually impossible – and the arrival of its third decade is a good moment to pause to record them.

First, the deepest depression ever recorded. True, there might have been some worse setbacks to growth over the centuries – the Black Death was apparently pretty bad for GDP – but since we started collecting reliable statistics the worst depression in history was recorded in Greece in this decade. According to numbers from the IMF published in 2018, Greece witnessed a bigger fall in output than the United States in the Great Depression of the 1930s, and it has lasted for longer as well. Given the advances in macro-economics since then, and the greater understanding of monetary and demand management, that is a heck of an achievement.