When the euro was launched six years ago there were many who did not give the new currency much of a chance. It was written off in some quarters as an ill-fated economic experiment. Some commentators argued that a single currency could never be stretched to cover such a range of divergent economies. Others suggested that the euro would be eschewed by international investors. There were predictions of rampant counterfeiting and uncontrolled price inflation. Even the symbols chosen to adorn the notes and coins were ridiculed.
Take a look at the single currency now. The euro ismaturing into a genuine rival to the once mightyAmerican greenback. In 2007 the value of euro notes in circulation exceeded the value of the dollar. Even dollar-worshipping American rap stars and international supermodels have begun to realise that the euro is worth more on the international exchanges than the US currency. But the story of the euro is primarily one of benefit to European citizens. Retailers did initially round prices up on conversion. But that has been more than offset by the advantages to consumers and businesses of being able to compare prices of goods and supplies across the Continent.
Perhaps the soundest indicator of the currency's success is the fact that nation states are still eager to become part of the eurozone. Cyprus and Malta joined yesterday, adding 1.2 million people to the 320 million Europeans already using the single currency. Both nations are expecting boosts to their economies as a result of easier access to the vast markets on their doorstep. Meanwhile, four of the other 2004 accession states have linked their currencies to the euro in an exchange rate trading band. The eurozone will grow steadily larger in the coming years. And as it does so it will grow stronger. Our own government's decision, along with Denmark and Sweden, to remain on the sidelines is looking increasingly bizarre. It should also be noted that the regulators of the single currency seem to have done a rather better job than our own financial authorities in responding to the dislocation on the international money markets resulting from the implosion of the US sub-prime mortgage sector. Unlike in Britain, there have been no bank runs in any of the 15 states operating under the single currency. The European Central Bank has also been as successful as the Bank of England in recent years in keeping inflation and interest rates at reasonable levels.
Another exciting new chapter in the EU's history opened yesterday. Slovenia became the first of the former Soviet-dominated member states to take on the rotating presidency of the Union. Slovenia was always more stable and economically developed than the other states of the former Yugoslavia. But it is still quite an achievement that a nation which was in the grip of a Communist dictatorship only two decades ago should now be at the head of the largest collection of democratic states on the planet. Some EU diplomats are also daring to hope that Slovenia will be able to use its influence in the Balkans to help defuse the crisis over Kosovan independence. This is by no means assured. Slovenia's historic ties to both Serbia and Kosovo could be as much of a hindrance as a help in negotiations. But that there is glimmer of hope is largely thanks to EU expansion. The Slovenian government will be pushing for other Balkan states to join the EU in due course, which should provide a boost to internal reformers and an incentive for these nations to look to the future, rather than a war-scarred past.
This is where perhaps the greatest power of the EU lies: its ability to promote peaceful development and economic co-operation even in lands beyond its existing boundaries. Let us hope that the EU's influence will continue to grow in 2008.