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“To compete with the United States, Europe will have to resolve its structural deficiencies”

In twenty-two years, Yves Mersch has participated in more than 530 meetings of the Board of Governors of the European Central Bank, first as Governor of the Bank of Luxembourg, then since 2012 as a member of the Executive Board of the ECB. This makes him one of the main memories of the euro.

As his mandate ends on December 14, this former negotiator of the Maastricht Treaty, who has dedicated his professional life to the European Union, looks generally satisfied with the single currency. But this moderate “hawk”, supporter of balanced budgets and monetary austerity, warns that the EU must continue structural reforms to strengthen its economy. He also believes that it should do more on health and safety issues, which are central to citizens’ concerns.

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How do you see the euro today in relation to the hopes you had when you negotiated Maastricht?

At the time, it was a leap into the unknown. International financial markets were skeptical. And it was not known if this currency would be accepted by the citizens. Today, I am very satisfied with the result. First of all, it is a currency popular with more than 75% of Europeans. Even the most Eurosceptic political parties have changed their minds, because citizens do not want to get rid of this achievement.

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It is then a currency appreciated by companies and sought after by financial markets. Until a few years ago, there were concerns about a possible disintegration of the euro area. The political reaction to the crisis and the action of the European Central Bank have allayed these concerns. Today, the rate differentials between countries, between companies in these countries, have been planed. There is increased demand for euro assets from international investors, even though the depth of our financial markets has not reached that of other jurisdictions, such as that of the United States for example.

Skepticism about the euro remains. Doesn’t the mistrust expressed towards monetary union in Italy, at the start of the Covid-19 pandemic, or in Greece, during the 2012-2015 crisis, worry you?

It is always easier to blame Europe for what goes wrong and to attribute success to national politics, and this can fuel mistrust. Despite everything, popular support for the euro is strong – in some member states it is even close to 90%. Let us not forget the permanent transfers within the EU, from the most advanced countries to the least developed.

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