The creation of the Economic and Monetary Union (EMU) and the euro ten years ago was a leap forward in the process of European integration, according to a recently launched policy brief, introduced at a Distinguished Lecture by Klaus Regling, EU Fellow at the Lee Kuan Yew School of Public Policy and Senior Adviser to the European Commission. The event drew a capacity crowd. Prof Kishore Mahbubahni, Dean of Lee Kuan Yew School of Public Policy, chaired the session. The policy brief reviewed the achievements of the first decade of the euro and the challenges ahead. It outlined out the various stages in implementing the EMU: from freeing movement of capital, to establishing a Central Bank, to economic convergence, fixing the exchange rate and launching the euro. The euro and the EMU have enjoyed a successful decade, buoyed by relatively benign conditions in the world economy, particularly in increasing trade flow, financial and product market integration, generating macroeconomic stability and growing status as an international currency. With the onset of the international financial crisis however, the euro-zone faced the first major test and challenge. The crisis exposed existing imbalances within the area and raised the stakes for economic coordination. Nonetheless, the EMU provided important protection and mitigated the effects of the crisis on vulnerable member states. The experience of the past decade offered lessons for economic integration in Asia, particularly in creating reserve and exchange rate arrangements. The brief noted that Asia existed in a different geopolitical context compared with the EU, but that a regional forum would probably still need to be a pre-condition for currency reserve and monetary cooperation, alongside political will, effective surveillance and clear procedures.

The financial crisis of 2007–10 has presented a number of key policy challenges for those concerned with the long-term stability of the euro area. It has shown that price stability as provided by the European Central Bank is not enough to guarantee financial stability, and exposed fault lines in governance and deficiencies in the architecture of the financial supervisory and regulatory framework. This book addresses these and other issues, including why the crisis affected some countries more than others, whether the euro is still attractive for new EU states, and what policy changes and structural reforms, both macro and micro, should be undertaken to ensure its future viability. Written by a team of leading academic and central bank economists, the book also includes chapters on the cross-country incidence of the crisis, the Irish crisis and ECB monetary policy during the crisis, and studies on Spain, the Baltics, Slovakia and Slovenia.

Coming at a critical juncture for the euro, the book takes stock of the ECB's experience during its first ten years and discusses the way ahead. The articles are written by well-known experts in the field and provide the reader with a comprehensive overview of relevant policy issues, including the ECB’s communication and its monetary strategy and instruments.

It is rare for countries to give up their currencies and thus their ability to influence such critical aspects of their economies as interest and exchange rates. Yet ten years ago a number of European countries did exactly that when they adopted the euro. Despite some dissent, there were a number of arguments in favor of this policy change: it would facilitate exchange of goods, money, and people by decreasing costs; it would increase trade; and it would enhance efficiency and competitiveness at the international level. A decade is an ideal time frame over which to evaluate the success of the euro and whether it has lived up to expectations. To that aim, Europe and the Euro looks at a number of important issues, including the effects of the euro on reform of goods and labor markets; its influence on business cycles and trade among members; and whether the single currency has induced convergence or divergence in the economic performance of member countries. While adoption of the euro may not have met the expectations of its most optimistic proponents, the benefits have been many, and there is reason to believe that the euro is robust enough to survive recent economic shocks. This volume is an essential reference on the first ten years of the euro and the workings of a monetary union.