Three cheers for the eurozone

Despite its young age, the Economic and Monetary Union — the boldest and most complex European project of the past 25 years — has withstood one of the worst economic and financial crises in living memory and given birth to the most important currency after the dollar — the euro. Now it faces a new challenge: countering the populist narrative and proving it can keep Europe on the right path.

Populists like to use the euro as a punching bag, but the truth is the monetary union has delivered tangible benefits for citizens and both big and small businesses. The eurozone has eliminated currency risks, removed exchange costs, lowered interest rates and made it easier for eurozone citizens to buy and sell abroad. And during the crisis, it helped protect the savings of millions of people.

The monetary union is admittedly still a work in process. It has brought about progress and growth. But we must also take a close look at what needs fixing. We want to deliver better jobs, more economic growth and more opportunities for every city and in every home. But we also know that progress can only be achieved with hard work — not with fear or unrealistic solutions.

Based on what we’ve learned over the past 25 years, there are three key changes we must make to update the monetary union to meet the challenges ahead.

First, we must create a clear separation between member countries and their national banks. The recent economic and financial crisis showed that governments’ cozy relationship with banks put people’s savings at risk — as happened in Ireland or Spain — and endangered the eurozone economy as a whole. Never again should taxpayers’ money be used to rescue banks. Enforcing a separation between public funds and bank debt must be a priority in the years ahead.

Second, the bloc must ensure the flexibility of its labor markets to boost job creation and global competitiveness. Encouraging decentralized wage-setting and removing obstacles to labor mobility will put a lot of Europeans back to work and help companies find qualified employees. The European model isn’t based on salary dumping, but on high added value and robust social standards.

Third, we must strive to make Europe the world’s foremost center for innovation and make it more attractive to creative, forward-thinking companies. Europe must become the world’s best talent hub. To achieve this, we will have to create the conditions that ensure European companies have access to better financing options and risk capital than mere bank loans typically provide. We will also need to adopt new laws, tax frameworks and capital rules that encourage more investors to finance European innovation and entrepreneurship.

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Innovation has become the most important driver of economic growth, prosperity and success, and Europe’s goal should be to become the birthplace of the next Facebook or Apple.

The EMU has improved the daily lives of Europeans and — in defiance of populist parties with empty promises — it will continue to provide concrete solutions to problems. Populists sometimes ask the right questions, but they don’t offer workable solutions. What they propose would take us backward, not equip us to tackle a globalized world.

We are at a crossroads. The script for Europe’s future is being written now. We must stand behind these three letters — “EMU” — to make Europe more competitive, prosperous and fair.

Joseph Daul is president of the European People’s Party (EPP). Jyrki Katainen is vice president of the European Commission and the EPP.