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What the Euro can Teach the World

Barry Eichengreen, Professor at the University of California, Berkeley, in Vienna.

Barry Eichengreen, Professor for Economics and Politics at the University of California, held his Marshall Plan Lecture in Vienna on December 4, 2002. Barry Eichengreen spoke in his lecture on the theme of 'Lessons of the Euro to the Rest of the World'. The highly esteemed expert in questions of international financing is also a member of prominent think tanks such as the National Bureau of Economic Research in Cambridge, Massachusetts and the Centre for Economic Policy Research in London. In 1997/98 Barry Eichengreen was one of the Chief Economists, alongside Stanley Fischer, of the International Monetary Fund (IMF). Europe – and especially Monetary Union – has been one of his main fields of interest for many years.

The political dimension of monetary unification is fundamental
Barry Eichengreen is one of the few US economists who predicted success for the euro from the beginning. The wide-spread scepticism about the new currency in the USA was explained by Barry Eichengreen in that his colleagues had concentrated too much on the differences in economic development of the EU countries at the point in time at which the monetary project was decided upon. Most of them had overlooked the fact that the gap had already narrowed considerably by the time the euro was actually introduced. Furthermore he himself had formulated a more positive prognosis regarding the euro because he had taken into account the political dimension of monetary unification.

This clarified the immense importance of the common currency, since had the euro failed, this would have endangered the entire 'Project Europe'. In Barry Eichengreen's view, the fact that European politicians knew this and therefore did the utmost to make the euro work has been the deciding factor in its success. For him it was simply a matter of time until the euro matched the dollar in importance as an international anchor currency.