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Euro pioneer: Europe would have suffered without single currency

By Oliver Joy, CNN
updated 9:07 AM EDT, Fri November 1, 2013
STORY HIGHLIGHTS
  • The Maastricht Treaty is set to celebrate its 20th anniversary. It came into force on November 1, 1993.
  • The treaty -- named after a Dutch city -- was responsible for the creation of Europe's single currency.
  • Since 1993, the EU has more than doubled in size, including many countries in Eastern Europe.

(CNN) -- One of the masterminds behind the euro says Europe would have suffered a far worse fate if the single currency had never been created.

The euro has struggled to shake the financial crisis which exploded four years ago but Jim Cloos, deputy director general at the General Secretariat of the Council of the European Union, said the problem lay in member states' adherence of rules.

The continent, he told CNN, needs a "stricter system to enforce discipline" on the common currency's 17 members.

Cloos' comments come as the Maastricht Treaty -- the accord responsible for the euro -- prepares to celebrate its 20th anniversary on November 1.

Read more: Lagarde warns against 'complacent' Europe

As one of the masterminds behind the treaty, Cloos staunchly defends its basic principles.

"I think now we all agree that we need more economic coordination," he said, "but it's still very important. It has brought open borders. It has brought investment possibilities. It has brought a much bigger market."

Signed in the quaint Dutch city of Maastricht, the treaty came into force in 1993 and created the European Union as a single body.

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Since then the EU has more than doubled in size, including many countries in Eastern Europe -- formerly under the yoke of communism -- a fact that Cloos believes is ignored.

"I think the integration in the last few years of 12 new countries, some of them are former Soviet Union countries, is just fantastic. It creates a new boost," he said. "Eastern Europe is one of the most dynamic economic regions in the world."

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IMF chief warns of European complacency

Now the world's largest trading bloc, the EU added its latest participant in July this year, when Croatia became the 28th member.

Solving Portugal's economic woes

But Michael Geary, assistant professor in modern Europe and the EU at Maastricht University, believes that although the treaty can be viewed as an overall success, the same can't be said for the single currency project and the debt crisis.

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Read more: Europe's economic winds of change

He said: "Without Maastricht and the single currency, there wouldn't have been the sheer volume of crazy interbank lending from the late 1990s into the early 2000s."

Geary argued that the single currency project became "too political" and that Spain and Italy were never intended to be a part of the original eurozone intake.

"[The eurozone] element is hugely important; because you're creating a single currency without a single state," he said, "a lot of it was based on trust between member states in terms of submitting proper budgets and financial information to gain entry."

What next for Europe?

After a four-year long debt crisis and over 400 billion euros ($534 billion) in rescue packages paid out, the euro area returned to growth in the second quarter of this year.

And now European leaders are now seeking to forge closer fiscal and banking ties, despite a wave of treaty changes since Maastricht's inception including Amsterdam, Nice and Lisbon.

Read more: Serbia eyes EU membership

Cloos refused to speculate on the prospect of further treaties, describing the European Union as a "living body."

But he believes the debt crisis has brought member states closer together.

Cloos added: "I cannot say when we will have new treaties. It's never finished... we will actually emerge stronger out of the crisis because we've taken a certain number of reforms which are absolutely major."

[Maastricht] has brought open borders. It has brought investment possibilities. It has brought a much bigger market.
Jim Cloos

Read more: Fishing for positives in Portugal's economy

Meanwhile, however, the U.K. is seeking a renegotiation of its membership following Prime Minister David Cameron's pledge to offer the British electorate a referendum in 2017.

Geary said further treaty signings can't be ruled out and any renegotiation might be the perfect opportunity for Cameron to "claw back" powers for the UK.

But he added: "I think there's a consensus there to let Lisbon bed down for a while and see how things play out because the rules are there, the governance is there. It's just a question of applying the rules rather than tinkering with things again. It should work in theory."

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