ABSTRACT
There is something impressive about the Euro: after nearly five years of pounding and hammering, it still exists. Compare this to the previous European Monetary System, which collapsed within three weeks after being attacked by speculators in the financial markets. This institutional stability stands in sharp contrast to the social and political turmoil it has brought about in many member states. Thus, one should not condemn the Euro too quickly, even if it is in crisis. Is the source of Europe’s economic suffering due to its currency or is it a consequence of mistaken policies? Blaming high unemployment, slow growth, fiscal austerity and high taxes on the Euro is understandable, given that Europeans are told that only austerity and deep structural reforms cutting into the welfare system can save the common currency (Schäuble 2011). There comes a point when, despite the greatest love for European unification, people will no longer put up with daily hardships as their sacrifice for a distant goal. But what if the problems were not due to the institutional arrangement of common money, but to mistaken policies? In that case, we should conclude that the Euro-crisis is political, not economic. 1
