Since its inception euro has been a monetary marvel and a symbol of the triumph of European integration. Ten years on, since the decision to launch the euro, it has lent macroeconomic solidity and political clout to the entire region. Euro, as a currency, has also strengthened enormously and challenged the hegemony of dollar. But not all has been hunky-dory for euro as it has not been able to fulfill some important initial expectations. Moreover, as the global environment has drastically changed, the future ahead of the euro could be more challenging.

In May 1998, in arguably the most important monetary innovation since Bretton Woods, the leaders of the European Union (EU) took the landmark decision to launch euro (the official currency of EU) in 11 member states starting from 1999. At that time, cynics raised their eyebrows and predicted that the system would crash. But, 10 years down the line, the Eurozone has strikingly consolidated itself and embraced 15 members with a total population of 320 million, greater than that of even US. Now, the Eurozone populace share the same currency and relish the advantages brought about by the integration of EU. And the European Commission (EC), the executive arm of EU, trumpets that a decade after its launch, European Monetary Union (EMU) and the euro are a `resounding success'. And the EC avers that the creation of euro marks the triumph of European integration which has been made possible through sound public finances and prudent political clout that ultimately led to more job creation. The sound institutional setting of EMU and the stability-oriented monetary policy adopted by European Central Bank (ECB) have helped maintain the inflation in the euro area at around 2% on an average since 1998, despite the fact that a large number of abrupt and adverse macroeconomic and geopolitical shocks have hit the euro area since its inception. Further, nominal interest rates, on an average, have declined to 5% in 2008, from around 9% in the 1990s. Again the disappearance of exchange rate costs and associated risks has boosted cross-border trade and investment, both of which now account for one-third of Eurozone GDP. Finally, needless to mention, the euro, as a currency, has become stronger ever, and with the support of international investors, it has now emerged as a credible rival to the USD, the world's leading reserve currency.

In a nutshell, the euro has certainly been a brilliant technical achievement, but at the same time, in some respects, EMU has fallen short of initial expectations. There has been no real improvement in the productivity front of the euro-area economy in the first 10 years which does not augur well for the long-term prospects of the Eurozone. And the growth rate of the Eurozone has also been around meager 2% in the first decade.

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