WASHINGTON, DC – Most of today’s economic institutions, from money to banking, evolved over many years – the unintended consequences of decisions by millions of individuals. By contrast, the eurozone stands out for being a deliberate creation. It is arguably the world’s second-largest, deliberately-planned economic structure, after Communism.
The eurozone is a remarkable experiment, a genuine vanguard of global progress. As 2012 comes to a close, it is in trouble, and every effort must be made to nurture and strengthen it.
By the second half of 2011, it was evident that emerging economies, which had weathered the financial crisis that began in 2008 moderately well, were taking on water as the eurozone crisis deepened. Growth slowed sharply in Brazil, India, China, and other countries.
Central banks acted as lenders of last resort, thereby averting a major crisis. In December 2011 and February 2012, the European Central Bank announced the long-term refinancing operation (LTRO), whereby European banks were lent around €1 trillion ($1.3 trillion) in two tranches. Then, in July, came ECB President Mario Draghi’s famous assurance to do “whatever it takes” to save the euro. The United States Federal Reserve injected liquidity, as did other advanced countries’ central banks.