The Euro And Our European Course

The euro is an important achievement which consolidates European unity. Proof of this is its recent use as an effective tool to deal with the collective effort against the pandemic.

Twenty years ago, the euro was introduced as the currency for 12 member states. Today 19 countries are members of the Eurozone, including Cyprus, which joined on January 1st, 2008. It is worth remembering this date along with our EU accession on May 1st, 2004. Both dates are milestones within Cyprus’ recent history.

The euro, one of the world’s hard currencies, has contributed to stabilizing the   exchange rate of the countries using it, while at the same time it has simplified transactions, facilitated business activities and travel among European citizens. Cyprus, as a services hub and an important tourist destination, has gained a lot since the euro was adopted.

The past two decades have been tumulus for the euro. During the great financial and banking crisis its weaknesses came to the surface. Consequently, new decisions had to be adopted to create a banking union which would supervise banking institutions under the authority of the European Central Bank. As a result of this the euro emerged more stable and ready to contribute to Europe’s economic growth.

Today, the EU and its member states are facing the SARS Covid-19 pandemic. Once more there is a need for deeper cooperation among member states with a view to securing a common fiscal policy. An important step taken towards this direction is that the EU, with Merkel’s and Macron’s leadership, promoted a common extra funding for the member states, through the Recovery and Resilience Fund.

This was an extremely important solidarity initiative, which met the immediate needs arising from the pandemic, such as the loss of wages and income. Moreover, this will set a good precedent in support of future growth, if member states manage to utilize the funding opportunities effectively.

The RRF will provide Cyprus with an additional 1.4 billion euro by 2026 – over and above the established 7-year EU funding through Structural Funds. This is vital as it provides a development boost not only to overcome the pandemic but also to restructure our economy, as we turn towards the green and digital transformation of the future.

We need an active business community, the contribution of all working people, as well as cooperation among social partners in order to achieve a healthy and sustainable growth which will not result in increasing inequality but instead effectively reduce it.

The recent initiative which the French and Italian heads of government Macron and Draghi appear to have undertaken to revise the Eurozone fiscal rules is yet another step towards this direction.

Today, Cyprus sits at the same table at the Eurozone group. Our course within the EU lies with all those who want and are willing to move towards common goals, with solidarity and consolidation of the rights of the Union’s citizens. Cyprus can respond effectively to this challenge, by regaining its credibility and serving with consistency these extremely important European objectives.

Achilleas Demetriades

12 January 2022

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