Introduced 18 years ago, the Euro has come a long way, bringing lots of benefits as well. 7 more countries have joined over the last decade. Regardless, 2017 isn’t looking like a great year for the euro. The sovereign debt crisis in the Eurozone showed the euro area’s ability to solve difficult problems. Members have shown commitment to preserving the currency by providing bailout loans, writing off debt and creating rescue mechanisms. Benefiting countries have been willing to go through fiscal consolidation programs along with serious structural reforms to preserve their membership. Despite the progress the European and Monetary Union remains fragile. Here are three reasons why: 1) Banks' troubles could destabilize the Eurozone; non-performing loans are reaching a worrying level in some member states, majorly Cyprus Greece and Italy. Along with the political turmoil in individual member states like Italy, and possibly France along with the eventuality that is Brexit the crisis could re-escalate. On the fiscal side the severe debt overhang and the rising number of countries with excessive macroeconomic imbalances is a cause of worry. And the fact that the sovereign debtors are so closely linked to their banking systems is a cause of worry as the downfall of one will lead to the fall of the other. 2) Uneven growth persists; The actions of the EU in addressing the shortcomings of the EMU has led to a disparity in the living standards across the continent. While these decisions have had effects on the everyday realities of people, haven’t been matched by increased involvement of citizens in the decision-making process. These socio-political anxieties have fuelled Eurosceptic tendencies across Europe, which in turn could threaten acceptability of the Euro project. 3) It’s a big election year for Europe; Upcoming election in the Netherlands, France, Germany and maybe Italy. Will they provide a more conducive environment for the Euro? Growing concerns about security and migration have pushed economic and fiscal policies further down the political agenda.
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