When the euro was first launched in January 1999, the consensus was that a strong central bank, a huge trade surplus and low inflation would drive the new currency upwards from its opening level of $1.17. I had little confidence in that view.
The divisions in the speed of economic growth and in the policies of national governments in the eurozone would make it difficult to conduct a clear monetary policy. Above all, the failure of Europe to deregulate markets, restructure its corporate sector and shrink the size of its state would soon weaken the currency.
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