The euro: Spectator or player in the world's financial imbalance?

Abstract

The creation of the euro limited world financial imbalances by increasing the financial stability of members of the Eurozone and also by triggering reworking of the international monetary system, which was added to the G20 agenda by France, during its presidency. Indeed, the Eurozone generated a current balance in equilibrium, unlike in the United States and China. But, above all, the single currency encouraged financial integration. It improved the liquidity and depth of financial markets and thus acted as a brake on deterioration of world financial imbalances. The euro cannot be blamed for current imbalances in Eurozone Member States and the European sovereign crisis. These are the result of the failure of the economic and monetary Union to channel strong growth in credits and to coordinate budgetary policies.