The Euro celebrated its 20th birthday Tuesday, having been adopted in 1999. The road has been a long and bumpy one for the single market's currency. While opting not to participate in the eurozone, the United Kingdom's upcoming potential departure from the European Union has been the greatest test for the eurozone thus far. Brexit is followed closely behind by the Great Recession and the Greek Crisis as far as events which have tested the resolve of the euro. With seven countries currently on deck to adopt the currency in the immediate future, Brexit could not have come at a worse time. What does the future hold for the euro?
The European Union project has largely been a successful one. The adoption of relatively open borders, despite recent news coverage, has been an incredible success. Countries with hard borders made the transport of goods and services, and thus trade, very difficult. The adoption of the euro was just the next successive event in improving trade relations. The euro itself has been great for the European Union and the eurozone as a whole. Specifically the inflationary pressures of quantitative easing (QE) and European Central Bank (ECB) spending have been off-set by the deflationary pressures of massive euro-denominated exports. This has made the euro a relatively stable currency and one with which commerce is easily executed. So what's the problem?
There is no problem that can't be addressed, that's the good news. The bad news is with the spread of populism among member states, the dream of a "United States of Europe" is almost certainly dead. Safety regulations and conformation of a liberal set of ideals and civil liberties made European goods and the businesses that produced them appear very attractive. The emphasis on civil liberties made the nations that produced them great places to live and work. This meant that the European Union and the eurozone would continue to be destinations for the best and the brightest the world over. While open borders has allowed for nearly any member of an EU country to move to another member state, these borders have begun to reemerge as borders again. With Brexit, EU citizens have been forced to face the reality that they could, at any time, be asked to leave their host country. While in the case of Brexit, a potential deal will most probably allow current residents to stay, immigration will become much harder post-Brexit.
The eurozone was supposed to be the top tier of the European Union, that is, only the most prosperous countries would be able to use the currency. With Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, and Sweden slated to join in 2019/2020, the eurozone will be tested once again. As an economic crisis in any one country - and the threat to expel it from the eurozone - threatens the sustainability of the zone as a whole, will some of these poorer countries be able to abide by the once rigorous standards of the eurozone? As public opinion begins to turn against the adoption of the euro in many countries, will the euro continue it's current trajectory of success? I believe it will. I believe the current trends of populism will fade with time and the symbiosis that exists from cooperating economically will bring all of the countries of Europe together, including in a few months or years, the United Kingdom.