The Role of the Euro: Insights from Former European Commissioner Yves-Thibault de Silguy
Yves-Thibault de Silguy discusses the economic challenges facing France, the significance of the euro, and the need for a strategic financial approach in Europe.
Yves-Thibault de Silguy, a distinguished figure in European economic policy and former European Commissioner for Economic and Monetary Affairs, spoke at an event organized by the Monaco Méditerranée Foundation on May 14, 2025. He addressed the ongoing economic decline in France, proposing strategies for revitalization and emphasizing the euro's potential as a stabilizing force in the global economy.
De Silguy highlighted the benefits of a stable currency, arguing that the euro has protected member countries from the adverse effects of competitive devaluations that were common in the early 1990s.
He contended that a weak currency leads to impoverishment, suggesting that the euro acts as an important shield for the European economy as a whole.
He noted that the absence of the euro could result in higher inflation and increased unemployment, potentially leading to severe social unrest.
The euro, now the world's second most significant currency, enjoys a relatively stable fluctuation margin.
De Silguy reflected on the euro's creation 26 years ago, envisaging a one-to-one parity with the US dollar as initially proposed.
Despite the deviation from the original criteria for its establishment by member states, he believes the euro has emerged as a substantial asset for Europe in international finance.
As countries, particularly in Asia, have shown interest in diversifying their reserves beyond the dollar, de Silguy pointed to a growing demand for the euro.
He advocated for enhanced strategic financial cooperation within Europe, including potential pan-European borrowing initiatives, suggesting that such measures could deepen the euro's financial market and foster wider adoption.
De Silguy recounted an anecdote about a prior discussion with the governor of the Bank of China, who expressed a keen interest in diversifying their holdings away from the dollar towards the euro.
This reflects a broader trend where countries seek alternatives to the dollar amid global economic uncertainties.
Despite the potential for expansion of the euro's influence, de Silguy acknowledged concerns regarding inflation related to increasing the euro's availability.
Historically, there has been resistance, particularly from German policymakers, towards euro-denominated debt issuance.
However, with a new chancellor, Friedrich Merz, indicating possible shifts in policy, there may be fresh opportunities for fiscal collaboration within Europe.
He discussed the geopolitical context where the existing economic order constructed post-World War II is being questioned by emerging economies such as the BRICS nations.
These countries, which comprise half of the world's population, are exploring ways to enhance their coordination and potentially create alternative monetary systems, thus presenting both challenges and opportunities for the euro.
De Silguy emphasized that growing the euro's international role could prompt a reevaluation of the economic balance of power, particularly in dialogue with the United States.
He articulated that stronger euro visibility could serve as an economic counterbalance and suggest a path towards a more equitable international financial system.
Regarding France's significant national debt, estimated at €3.3 trillion, de Silguy warned against simplistic fiscal cutbacks.
He stressed the importance of regaining public trust and fostering economic growth to generate government revenue, rather than enacting severe social spending cuts.
He proposed a strategic recalibration of public spending, urging a focus on national rather than extraterritorial investments by state-owned enterprises, which could unlock substantial financial resources.
He highlighted inefficiencies within the French public sector, advocating for a systematic review and reduction of unnecessary agencies and expenditures.
De Silguy's analysis calls attention to the need for a comprehensive approach to economic policy that prioritizes growth while ensuring public spending remains sustainable.
His remarks reflect a deep concern over the fiscal health of France and the stability of the eurozone, emphasizing a collective responsibility to provide a robust alternative to current economic uncertainties.
De Silguy highlighted the benefits of a stable currency, arguing that the euro has protected member countries from the adverse effects of competitive devaluations that were common in the early 1990s.
He contended that a weak currency leads to impoverishment, suggesting that the euro acts as an important shield for the European economy as a whole.
He noted that the absence of the euro could result in higher inflation and increased unemployment, potentially leading to severe social unrest.
The euro, now the world's second most significant currency, enjoys a relatively stable fluctuation margin.
De Silguy reflected on the euro's creation 26 years ago, envisaging a one-to-one parity with the US dollar as initially proposed.
Despite the deviation from the original criteria for its establishment by member states, he believes the euro has emerged as a substantial asset for Europe in international finance.
As countries, particularly in Asia, have shown interest in diversifying their reserves beyond the dollar, de Silguy pointed to a growing demand for the euro.
He advocated for enhanced strategic financial cooperation within Europe, including potential pan-European borrowing initiatives, suggesting that such measures could deepen the euro's financial market and foster wider adoption.
De Silguy recounted an anecdote about a prior discussion with the governor of the Bank of China, who expressed a keen interest in diversifying their holdings away from the dollar towards the euro.
This reflects a broader trend where countries seek alternatives to the dollar amid global economic uncertainties.
Despite the potential for expansion of the euro's influence, de Silguy acknowledged concerns regarding inflation related to increasing the euro's availability.
Historically, there has been resistance, particularly from German policymakers, towards euro-denominated debt issuance.
However, with a new chancellor, Friedrich Merz, indicating possible shifts in policy, there may be fresh opportunities for fiscal collaboration within Europe.
He discussed the geopolitical context where the existing economic order constructed post-World War II is being questioned by emerging economies such as the BRICS nations.
These countries, which comprise half of the world's population, are exploring ways to enhance their coordination and potentially create alternative monetary systems, thus presenting both challenges and opportunities for the euro.
De Silguy emphasized that growing the euro's international role could prompt a reevaluation of the economic balance of power, particularly in dialogue with the United States.
He articulated that stronger euro visibility could serve as an economic counterbalance and suggest a path towards a more equitable international financial system.
Regarding France's significant national debt, estimated at €3.3 trillion, de Silguy warned against simplistic fiscal cutbacks.
He stressed the importance of regaining public trust and fostering economic growth to generate government revenue, rather than enacting severe social spending cuts.
He proposed a strategic recalibration of public spending, urging a focus on national rather than extraterritorial investments by state-owned enterprises, which could unlock substantial financial resources.
He highlighted inefficiencies within the French public sector, advocating for a systematic review and reduction of unnecessary agencies and expenditures.
De Silguy's analysis calls attention to the need for a comprehensive approach to economic policy that prioritizes growth while ensuring public spending remains sustainable.
His remarks reflect a deep concern over the fiscal health of France and the stability of the eurozone, emphasizing a collective responsibility to provide a robust alternative to current economic uncertainties.