The Euro after 10 years

The euro is not a magical solution for all problems.

Klaus Regling, the European Union fellow at the Lee Kuan Yew School of Public Policy in Singapore, returned to ADBI on 15 June to speak on The Euro After 10 Years: Achievements, Challenges, and Implications for Asia.

According to Regling, the first decade of the euro was a big success, surprising even skeptics. But expectations that the euro would solve all of Europe’s problems were unrealistic. Problems associated with the euro system that have been building up for some time are now more visible in light of the global economic crisis.

This has led some to speculate that the eurozone might break up, with some current member countries choosing to stop using the common currency. However, Regling believes that there will be no breakup. Countries with adjustment problems would be worse off outside the euro area than inside. Indeed, more countries now want to join the euro area.

What are the lessons for Asia from the euro experience? While there are big differences between the economic and regional integration situations in Asia and Europe, their respective objectives for regional integration are the same—namely, peace, growth, jobs, crisis management, and shaping globalization. Mr. Regling encouraged Asia to continue with its process of regional integration because the benefits could be significant. However, as is the case with Europe, deeper Asian regional integration requires political will and independent institutions.

Read a more detailed summary of this event.