The European Union’s common currency, the euro, has long been described as its most brittle element. It’s true, not all EU member states use it (yet): While Bulgaria joined the eurozone as its 21st member in January, the Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden have stayed away. But if the EU were ever to fall apart, many always believed that it would be because of this monetary straitjacket binding together wildly different economies.
When the 2008 global financial crisis swept away banks in Ireland and Spain and exposed doctored accounts in Greece, Wall Street bet on the collapse of the common currency. The euro, which did not correspond even closely to an optimal currency area as defined by economist Robert Mundell, could not survive, many argued. Politics would have to yield to the would-be laws of economics.
There was real drama, and it almost came to pass. After the Greeks voted down a bailout package in 2015, Wolfgang Schäuble, Germany’s formidable finance minister, proposed pushing Greece out of the euro. Chancellor Angela Merkel overruled him, heeding French President François Hollande’s warning that a Grexit would not save the euro, but be the first step toward its burial.
The significance of Merkel’s decision becomes even clearer when one imagines how the EU would fare today—caught between neo-imperial Russia and an openly neo-colonial United States—without the euro. Far from being a liability, the single currency has become Europe’s central shock absorber in an era of extreme geopolitical stress. Take Ukraine. Russia’s aggression is not only a military assault on a neighboring state; Moscow is also conducting economic warfare. Energy prices exploded in 2022, supply chains seized up, inflation surged, and EU governments were forced to spend at near-wartime levels to shield households and firms.
In a pre-euro Europe, this shock would have played out through national currencies. Investors would have fled a reborn drachma, lira, or peseta, driving down their value. Germany’s already struggling export industry would meanwhile have suffered from a sharply appreciating deutschmark. Government bond spreads would have dramatically widened, as interest rates on sovereign debt of countries with little fiscal space would have surged.
Some countries would have tightened their belts under market pressure; others would have inflated away the shock through devaluation. Solidarity—already contested—would have collapsed into mutual suspicion, as shifting exchange rates redistributed pain between neighbors. Speculators would have targeted weaker currencies, deepening the crisis.
With economies fragmenting, Europe’s response to the war would almost certainly have fragmented as well. Convincing voters to fund a defense buildup and sustained support for Ukraine would have been far harder amid a sovereign debt crisis. Divisions between frontline states and more distant capitals over how to confront Russian President Vladimir Putin’s war of conquest would have emerged immediately.
“Whatever It Takes”
None of this happened. Former casualties of the debt crisis—Italy, Spain, Greece, Portugal, even France—were able to borrow at sustainable rates while running huge deficits to cope with energy subsidies and rising defense spending. Why? Because they borrowed in a currency backed by the collective weight of the eurozone and, crucially, by European Central Bank President Mario Draghi’s 2012 promise to do “whatever it takes” to defend the euro.
The euro also made sanctions possible at scale. Cutting Russia off from parts of the global financial system, freezing assets, and reducing energy dependence required coordinated monetary and financial power. A single currency made European resolve more credible and durable. The same logic applies to Donald Trump’s return to the presidency. Trump is openly hostile to the EU as such. The US National Security Strategy explicitly states that a return to a Europe of loosely aligned sovereign states is a US goal. That is, because without the euro, Europeans would be even less able to resist Trump’s divide-and-rule tactics. With 21 of 27 EU members in the eurozone, exchange rates are largely removed as a coercive political tool. Even non-euro countries benefit indirectly through ECB swap lines. In a world of continental powers, Europe at least possesses a continental-scale monetary policy.
Critics often argue that the euro creates centrifugal forces, especially in crises. The past few years suggest the opposite is also true. Faced with the pandemic, the war in Ukraine, and a hostile United States, the EU deepened fiscal integration, issued common debt, and accepted a more activist role for EU institutions from health to defense. These steps have been greatly aided by the euro, as it constrained the most dangerous reflex in European politics: the temptation to seek salvation through purely national action. The euro ties the economic fate of most member states together irreversibly and thereby forces governments to confront shared problems together—or not at all. In these conditions, the euro thus acts as an anchor for the EU: a common core that foreign leaders cannot easily attack and that domestic populists hesitate to dismantle, because blowing it up would be costlier than preserving it.
None of this is to say the euro is perfect. It remains incomplete and reliant on political will that can waver. But the common currency offers a glimpse of a sovereign European future. It shows that Europe can act with sovereignty if it chooses—by pooling national power rather than surrendering it. And this, too, can be popular: Support for the euro now stands at a record 83 percent.
Joseph de Weck is IPQ’s Paris columnist and author of Emmanuel Macron: The Revolutionary President.
