FOREWORD—What this
report is about
2008 marks the tenth anniversary of the creation
of the European Central Bank and the setting of conversion rates
between the currencies of the original participating countries
of the eurozone. Since then the euro has been introduced in fifteen
Member States with negligible transition costs. Before its launch
there were widely differing views about the impact of the euro:
on the one hand, fears were expressed that it would be the victim
of speculation and collapse within months, and that the rancour
it might create between EU members could lead to a disintegration
of the entire Union. On the other side the euro's proponents suggested
that it would stimulate a period of growth in Europe exceeding
that of other major world economies, become a global reserve currency,
and pave the way for further single market reforms.
This report examines the structure and governance
of the eurozone institutions and developments in the eurozone
economy in the past ten years, including the management of inflation
and the impacts on trade and economic growth.
Our primary conclusion is that the young currency
has made a positive start to its life, but it is too soon to state
what the future holds based on the experience to date. We found
little support for extremely optimistic or pessimistic predictions
for the currency's future, although we note that the currency
is still in its early stages and has not yet been fully tested.
Ten years is a relatively short period in economic history. While
the euro appears to have established its resilience in the face
of some significant challenges, other external factors may pose
a stiffer obstacle in the future.
This report does not address the United Kingdom's
position with respect to the currency; we also think it inappropriate
to reach conclusions on the impact of current liquidity shortages
in financial markets while conditions remain unsettled.
| 
