The Euro after its first decade: Weathering the financial storm and enlarging the Euro area

The first decade of economic and monetary union in Europe (EMU) has been a huge success. EMU brought significant benefits to its member countries and accelerated the European integration process. However, imbalances within EMU - in terms of differences in growth, inflation, competitiveness, current account and budget balances - increased during the last 10 years and the global economic crisis has made these imbalances and their economic implications more visible. Nevertheless, the euro has protected its members during the crisis and arguments that the crisis would lead to a break-up of EMU are neither new nor convincing. But lessons can be learned from the crisis. Policy coordination among EMU members should be improved and structural reforms accelerated, the framework for the supervision of financial markets needs to be strengthened, and the external representation must be streamlined. The crisis has enhanced the attractiveness of EMU and most EU countries that are not yet members of EMU are expected to join during the next decade.