The euro was born in 1999, and so is still technically just a teenager. Growing pains and volatility are to be expected.
Still, the defensive tone of this morning’s European Parliament testimony by the currency’s chief steward, European Central Bank President Mario Draghi, speaks to the currency union’s especially troubled youth.
Draghi, who famously helped ease the euro’s deepest crisis in 2012 with the three simple words “whatever it takes,” still seems to be doing whatever he can to fend off the currency union’s vocal detractors. Earlier in his tenure at the ECB, Draghi’s primary critics came from Germany, where officials worried the central bank’s easy money policies might help weaker economies while generating inflation for Germans — a fear that has proven repeatedly unfounded.
But now, with presidential elections looming in France in the wake of right-wing political victories first in Britain and the United States, the magnitude of the existential threat to the euro only seems to have become greater.
“It is easy to underestimate the strength of this commitment,” Draghi said. “But that would overlook the progress we have made. With the single currency, we have forged bonds that survived the worst economic crisis since the Second World War. This was in fact the original raison d’être of the European project: keeping us united in difficult times, when it is all too tempting to turn against our neighbours or seek national solutions.”
It’s not hard to understand why Draghi chose to speak of the common currency in such broad, historical terms. This was Draghi’s message to the continent’s nationalists, like France’s Marine Le Pen, who would like to dissolve the euro.
He also didn’t mince words when it came to the Trump administration’s recent accusation that Germany was manipulating its currency by undervaluing the euro, rejecting the claim outright. Trump’s is a curious claim considering Germany has also been calling for higher interest rates, which would likely be accompanied by a stronger euro.
However, Draghi still had a word for his less radical, pro-euro German critics.
“The objective of Economic and Monetary Union should be to strive to achieve ‘economic and social progress’ as was the intention of the signatories to the Maastricht Treaty. And for this, we need sustained growth and job creation,” said Draghi. He then went on to list the economic stabilisation and improvement seen in the last few years in detail, adding “our monetary policy has been a key contributor to the positive economic developments I have described.”