The Sustainable Development Goals have a foundation in partnership amongst countries to find innovative solutions to economic, social, and political problems.
In theory, the Maastricht Treaty (entered into force November 1st 1993) which created the European Union and single currency in the Euro, would seem like an incredible piece of foresight. The preamble of the treaty calls for “reinforcing the European identity and its independence in order to promote peace, security and progress in Europe and in the world”. This all sounds very good and progressive. The Euro currency was distributed in January 2002.
Aspects of the Eurozone have been very successful. The agreement has eased travel for European citizens, made trade more inclusive, and strengthened European identity. Hopes for the Euro currency were high. The Euro was the consolidation of “the largest trade bloc in the world” and created “one of the world’s strongest currencies”. Nations initially thrived with the unprecedented access to credit. The foundation of the currencies strength was reliant on its implementation. The “convergence criteria” of the Maastricht Treaty and the 1997 Stability and Growth Pact were meant to guarantee fiscal compliance by participating European nations (ensure inflation below 1.5 percent, budget deficits below 3 percent of GDP, and a debt-to-GDP ratio of less than 60 percent). As we all know, not all of these rules were followed, which has led to a tremendous sovereign debt crisis. Weak due diligence for nations that entered the Euro was largely at fault. Does this mean the Euro and its ideas of a central currency are a failure?
Where I feel we can see the ideas of countries working together for growth is within the Multilateral Development Banks(MDBs) (The African Development Bank, The Asian Development Bank, The European Bank for Reconstruction and Development, and the Inter-American Development Bank Group). These banks in total comprise billions of investment on a global scale and each have unique investment priorities and donor participation/access. Now, what I am postulating is “what sort of lessons can the above MDBs learn from the European Central Bank and Eurozone crisis”? Can the regional focus or growth of a specific MDB ever see the establishment of a regional currency that is more effectively regulated? This would be a massive undertaking of bureaucracy and infrastructure that would also require for nations to be on an economic level similar enough they could operate at similar fiscal compliance rates. Impossible? As we look for innovative solutions to forward sustainable development now and beyond, we could do well to consider how multi-state monetary cooperation could be of benefit to stabilizing disparate economies.
06/16/2016 4:14 AM -Austin Schiano