Word: euros
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...European Commission president José Manuel Barroso credits the euro for delivering lower inflation, lower interest rates and greater price stability, and helping to create 16 million jobs. More immediately, the euro is shielding member states in this time of economic turmoil, preventing a currency crisis in addition to the credit crunch. "The euro is sheltering businesses from the exchange rate volatility, which has battered them in previous downturns," Barroso said on Monday. "To put it simply, the euro works...
...Before the euro, a financial crisis in Europe went hand in hand with currency woes: a run on weaker currencies, heavy intervention by central banks and finally a collapse of the parity system. "I've lived through currency devaluations, and they are fraught with anxieties," says Hans Martens, chief executive of the European Policy Centre. "But the way the euro coped with the financial crisis was absolutely great. You have a big island of stability, with small nations protected when the big waves became rough...
...euro's 10th anniversary will see the euro zone take on a 16th member, Slovakia. Eight other central and East European countries have set the goal of joining within the next six years, including Poland, whose political establishment dropped its longtime opposition after a recent run on the Polish zloty. The euro has found some other unexpected converts too, thanks to the financial crisis. The Danes voted against joining the euro zone in 2000, but they are set to hold another referendum in March. Iceland - not even an E.U. member - is pondering "unilateral euroization" after seeing its krona plunge nearly...
...biggest prize of all, Britain, is said to be warming to the euro. Barroso recently claimed that London is "closer than ever before" to euro-zone entry and that "the people who matter in Britain" think it should join. That may be overstating things a bit, but a report by research group Chatham House warns that as the euro zone grows, the U.K. risks being excluded from "deeper intra-E.U. economic consultation and coordination, including in areas of significant national interest, such as financial market regulation." (See pictures of the financial crisis in London...
...doesn't help that the pound is wilting. Two years ago, one euro was worth just ?0.65. Now, humbled by bank crashes, government bailouts and a collapsing housing market that has forced massive interest rate cuts, Europe's currency is within a pence or two of parity with the pound. "The debate has changed from a total fantasy in the U.K.," says Jean Pisani-Ferry, director of Brussels-based think tank Bruegel. "The political obstacles still remain strong, but it has changed the perception of the U.K. as the perfect system...