Focus on Central, Eastern and South-Eastern Europe
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 1: The Euro’s Role on the World Stage
Joaquín Almunia The title of this book – The Euro and Economic Stability: Focus on Central, Eastern and South-Eastern Europe – could not be more pertinent. During the crisis, the euro effectively shielded members of the European monetary union (EMU) from the turbulences that proved so costly in times of stress in the past. But at the same time, we must recognize that the single currency is not a solution to all economic woes. The opportunity to learn from the lessons of this crisis and prepare a strategy that will strengthen Europe’s response to any future adverse economic shocks is of utmost importance for all of us, and in particular for the European Union (EU) new member states (NMS), as many of them still face the challenge of adopting the single currency. 1.1 THE GLOBAL ECONOMIC CRISIS But before referring to the Central and Eastern European (CEE) region, let me first turn to the impact of the crisis and the measures we have already taken to counter its devastating effects. Financial markets were at the epicentre of the crisis. The EU and the euro area were not spared, with some large financial institutions on the verge of default. The risk of a collapse of the entire European financial system was no longer abstract – it had become a real danger. The European reaction did not linger. The European Commission and the European Council quickly developed principles and objectives for a coordinated approach. For its part, the European Central Bank (ECB) was the...
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