THE EURO AND CURRENT FINANCIAL CRISIS
This article discusses the issues related to the European single currency in the context of the current global financial crisis. The paper gives an overview on the process and strategy for transition to the European Monetary Union (EMU) and discusses expected benefits and costs of the formation of the EMU. Since its launch in 1999 the euro has contributed to macroeconomic stability within the euro zone and produces clear benefits for companies, financial institutions and ordinary citizens. It is evident that the performance of the euro has been a success for the first ten years, but it is now faced with challenges owing to the current financial crisis. The present crisis shows that the weaknesses in the control and crisis management competence of the euro zone are affecting fiscal and financial stability in the EMU. The crisis in Greece, which mismanaged its economy and misled other the euro members about its true budget figures, has had an impact on the euro zone as a whole. Although the euro provides stability to the EMU members, there are doubts about the ability of the euro zone to respond to current financial problems.
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