The Guardian view on the euro crisis: the triumph of experience over hope | Editorial
"Great powers have great currencies" goes the aphorism of Robert Mundell, the Nobel prize-winning political economist. Sure enough, one of the easiest guides to power is to check which currency is most widely accepted around the world. When Britannia ruled the waves, pound sterling ruled the foreign exchanges, while the long "American century" has been papered in greenbacks. Millennia before the iron age of Jean-Claude Juncker and Martin Schulz, Athens enjoyed a golden age - and so did the silver drachma.
At its birth in 2000, the euro was garlanded with predictions by Mr Mundell and other eminent economists that it would soon challenge the dollar for global dominance. One of Bill Clinton's top economic advisers, Jeffrey Frankel, went so far as to co-author a forecast that the euro would overtake the dollar as the world's top currency " by as early as 2015. This is about more than a league table. As home of the dollar, the US enjoys what has been called an "exorbitant privilege". Washington can borrow, even at times of crisis, far more easily and cheaply than its competitors. A great currency makes it easier to finance the role of a great power. It also confirms that status. If money talks, it is scarcely more eloquent than when Saddam Hussein redenominated Iraq's oil exports in euros, rather than dollars ("the currency of the enemy"), or Beijing picked London as a hub for trading the renminbi. When Jacques Delors, the former European commission head, claimed at its inception, "The little euro will become big", no one quibbled. How could it not? Europe was expanding east and Washington's "unipolar moment" was drawing to a close. The idea of a monetary union without political union was novel, but it fitted contemporary scepticism of the nation state as an "imagined community" - not to mention the belief of technocrats that budgetary rules could trump political norms.
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