A happy 10th anniversary, Emu

European monetary union is a bumble-bee that has taken flight. However improbable the celestial design, it has succeeded in real life. A decade ago, critics predicted financial disaster when 11 European countries agreed to fuse their currencies. That some economists are today seriously – if prematurely – debating whether the euro can overtake the US dollar as the world's reserve currency underscores Emu's hard-earned credibility.

The Emu's technical achievements are striking. Inflation expectations have been firmly anchored with the eurozone inflation rate averaging just over 2 per cent in the past decade. Yet interest rates have fallen to their lowest levels in a generation. Monetary union has stimulated intra-area trade and financial market integration – albeit not as successfully as many had initially hoped. Some 16m jobs have been created in the eurozone over the past decade (2m more than in the US over the same period), partly redressing Europe's shameful employment record.

As the ideological stepchild of Germany's Bundesbank, the European Central Bank has proved conservative in monetary outlook yet innovative in operation. Its consensual style of decision-making and real-time explanation of policy via press conferences were necessary, if risky, experiments for a multinational central bank that has since expanded to embrace 15 members. Yet these experiments have worked well in practice. After a clumsy start, the ECB has effectively responded to the credit crisis too.

That said, Emu has not yet fully evolved. The severest strains to monetary union are perhaps only just beginning, as countries such as Spain and Italy face agonising structural adjustments to their economies to remain competitive now that the option of currency devaluation has been ruled out.

As the European Commission noted in its 10th anniversary report, there also remain glaring deficiencies in the eurozone's governance. Governments need to do far more to promote fiscal discipline and structural reforms if monetary union is to endure. The eurozone must do a better job of relating to the outside world. Europe's economic institutions should be better co-ordinated.

It would help if the eurozone's politicians were to mark Emu's 10th birthday by singing its achievements more loudly. Instead, some blame the ECB for an overly tight monetary policy and an overvalued euro. Emu's success should em­bolden other EU members to join. It is a pity that Britain's political paralysis precludes it from staging a serious debate on the subject.

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