11. The Euro in Perspective

Looking at the euro from a 20-year perspective, one sees many successes that are consistent with the principles of economic freedom: the emphasis on transparency, the goal of price stability, endorsement of market-based reforms, encouragement of sound budget policy, open capital markets, and improved communication. However, recent deviations from rules-based strategies may have delayed more classical liberal policies. One reason for the deviations may be special circumstances such as the lower bound on interest rates, but in this chapter, international influences are emphasized. While these have provided incentives to adopt policies conducive to economic freedom, they may have led to less rules-based policies and less classical liberalism. This is a reason for a rules-based reform of the international monetary system.