On April 17, 2015, The European Institute, in partnership with the Embassy of the Republic of Lithuania, held a discussion on Lithuania’s adoption of the Euro and the advantages and obstacles of the Eurozone with The Honorable Andrius Kubilius, former Prime Minister of Lithuania and Leader of the Opposition in the Lithuanian Parliament (Seimas), and Antonio de Lecea, Principal Advisor for Economic & Financial Affairs at the Delegation of the European Union to the United States. Mr. Kubiliusstated that Lithuania’s accession to the European Monetary Union was core to his country’s strategic infrastructure integration within the Euro-Atlantic community. Although the Lithuanian economy shrank by 15% during the financial crisis, it is now boasts one of the fastest growing in Europe. Looking ahead, Mr. Kubilius noted, Lithuania will prioritize biotechnology and service industries in order to build sustainable economic growth and ensure competitiveness in the global marketplace. Beyond the considerable achievements of the European Monetary Union since its creation, Mr. de Lecea more needs to be done in terms of investment, structural reforms, the integration of markets and the adjustment of legal divergences that have so far stymied the creation of a proper banking union. If all member states reformed and narrowed divergences, they would see an annual growth of 6% over the next decade. In June, the Presidents of the Council, Commission, Eurogroup and the European Central Bank will release a medium to long-term blueprint to those ends.
Although pressure has been rising to address the perils of low inflation, the European Central Bank held rates steady (April 3) at its meeting, but its president, Mario Draghi, emphasized the bank stands united in taking steps, including unconventional ones that include asset purchases, to combat inflation.
The euro was welcomed at birth on Jan. 1, 1999, as a new financial currency (coins and banknotes were issued three years later) and hoped by its promoters to be an alternative to the dollar, which had reigned as the world’s primary reserve currency since the 1944 Bretton Woods agreement. In its early years, the share of global official foreign exchange reserves denominated in EUR rose rapidly, while those in USD declined. But the Euro-zone debt crisis threatened, from late 2009, the euro’s very existence, making any speculation that it might replace the dollar as the world’s principal reserve currency seem a bad joke. The existential threat to the currency and even the European Union (EU), forced Euro-zone governments, the European Central Bank and the banking system to forge a more credible governmental, financial and regulatory structure to support the euro. 
After Germany’s federal election on Sunday, September 22, there may be a growing risk of another chapter in the Euro crisis saga that began in late 2009. Causes could be Germany’s new coalition government’s reaction to new international bond market stresses; Euro member governments’ political problems; unfinished business such as reform of Euro institutions and a Euro banking union; plus U.S. financial and fiscal stresses that may trigger new strains in Euro financial markets.
Europe is at the crossroads. Of course, whenever we speak about Europe or transatlantic relations, we are always at the crossroads, but it’s at a crossroad on four major issues. The next 18 months will be decisive to know whether Europe will choose the right direction or not.
© COPYRIGHT THE EUROPEAN INSTITUTE 2009
You may share using our article tools. Please don't cut articles from our site and redistribute by email or post to the web.