The Foreign Service Journal, February 2012

F E B R U A R Y 2 0 1 2 / F O R E I G N S E R V I C E J O U R N A L 19 etary policy. The European Central Bank was not empowered to serve as a lender of last resort to euro zone governments, in contrast to the au- thority the Federal Reserve had been given in the United States. The ECB was committed to fighting inflation above all other goals and was determined to ensure that the euro would be a strong currency. Nevertheless, all these doubts about the viability of the euro were subordinated to the foreign policy priority attached to German unification and deeper inte- gration of Europe. The consensus was that the fragilities and fault lines in the euro zone could be dealt with at a later stage. The initial experience with the euro was positive, cre- ating no sense of urgency to address the fragilities. Indeed, the euro might have continued to enjoy success if the global economy had evolved under normal conditions. Unfortunately, the seeds of various pre-existing problems were sprouting, and the global economy soon fell into its deepest crisis since the Great De- pression. The stresses of the financial col- lapse that began in 2007 and 2008 magnified the fault lines that had ex- isted since the founding of the euro zone. In the absence of a fiscal union, the Europeans had adopted the “Maastricht criteria” with the goal of ensuring that euro zone members would maintain disciplined budget policies. Unfortunately, there was only a weak commitment to polic- ing compliance with this requirement. The soft economy early in this century persuaded pol- icymakers in France, Germany and the European Union that deficits larger than those contemplated by Maastricht F OCUS The creation of the euro a decade ago was a major step in the integration of Europe and the binding of Germany to a common European future.