andreas dombret : the euro area – where do we stand? speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the german - turkish chamber of trade and commerce, istanbul, 10 february 2015. * 1. * * introduction ladies and gentlemen thank you for inviting me to speak here at the german - turkish chamber of industry and commerce in istanbul. isaac newton once observed that “ we build too many walls and not enough bridges ”. istanbul has for centuries been a bridge between two continents – asia and europe. it seems to me that istanbul is therefore an excellent place to hold this year ’ s g20 meetings. after all, the purpose of these meetings is to build bridges between nations by fostering dialogue and the mutual exchange of information. and this objective is of course also pursued by the german - turkish chamber of trade and commerce. moreover, mutual exchange is essential in a globalised world where countries are no longer isolated islands but part of a closely interconnected community. the global financial crisis has highlighted how close these connections are and how quickly a problem in one corner of the world can spread around the globe. this truth applies all the more to countries sharing a common currency such as the member states of the euro area. back in 1999, eleven european countries adopted the euro as their common currency. today, the single currency is shared by 19 countries and more than 300 million people, which in my eyes makes it a success story. that said, it has not always been plain sailing. in the wake of the global financial crisis of 2008, the euro area slid into a financial crisis of its own. this was compounded in 2010 when greece entered into a sovereign debt crisis, triggering a sudden loss of confidence in other member states which eventually brought the euro area to the brink of collapse. extensive rescue packages along with non - standard measures taken by the ecb helped to calm the markets and prevented the crisis from escalating. to some commentators, the present situation is not much different. greece is again capturing the headlines. unrelated to greece, the ecb again gave the green light to nonstandard measures as a means of addressing the risks associated with too prolonged a period of low inflation. to obtain a clearer picture, let us take a tour of the euro area to see where we stand at present and where we are headed in the future. unsurprisingly, i will begin by focussing on the growth prospects of the german economy

to europe next year, you will meet the euro wherever you go – because in just a few weeks it will exist in physical form. paris, rome, brussels or berlin : in most of europe, you will be able to pay with a single currency – euro bills and coins – starting on january 1, 2002. for you here in the united states, it is natural that the dollar is legal tender in all fifty states of the union. for us in europe, though, monetary union is a quantum leap, both politically and economically. in my speech i would like to address the following issues : 1. the historical background of the euro. 2. the essential features of the new system and its ramifications. 3. the future outlook for the euro – the political agenda. the historical background of the euro the euro is not quite as new as the title of my speech would lead you to believe. in fact, the euro is already a reality. the new european currency was born nearly three years ago when europe entered stage three of economic and monetary union. however, compared with the dollar and its long tradition, the euro is a “ rookie ” in the monetary policy league. however, this “ rookie ” took the field after going through a tough “ training camp ” on the field of stability. nearly five decades ago, far - sighted european politicians kicked off the drive toward european unification. sure, this drive has repeatedly been hampered by setbacks. however, the thrust towards greater integration has ultimately been unmistakable. european economic integration has been firmly established according to the principle of an “ open market economy with free competition. ” this was not as obvious back then, as it seems today. here in the united states, in particular, people might say “ what else? ” in europe, though, it would behoove us to keep reminding ourselves of what it takes for a market economy such as ours to function properly. only by paying attention to fundamental principles - personal responsibility, individual initiative, entrepreneurial spirit, and competition – can social equity be achieved ; and this is what is needed to overcome the severe structural problems that still beset europe. we europeans can learn much in this sphere from the united states. the latest and greatest step towards integration in europe has been entry into stage three of economic and monetary union. the euro - area countries have entered into a community of solidarity without any “ exit. ” there is no precedent for this unique project. in fact, it can rightly be called the