This is not how they wanted the euro

The debt crisis now unravelling was something the architects of the euro didn't foresee. But they didn't think Greece would be part of the single currency either.

The looming collapse of the European bond markets, the drop of the euro and the 750 billion euro emergency fund, financed by the EU member states and the IMF, have surprised some of the people who stood at the birth of the euro. "We never saw a crisis like this coming when we established the Economic and Monetary Union in 1992," said Cees Maas, who was involved in setting up Europe's single currency. In 1992, Maas was the treasurer-general of the Dutch finance ministry and one of the driving forces behind the Treaty of Maastricht, which led to the creation of the euro.

"But we could not have imagined that Greece would be a part of the monetary union in 2010," said Maas. The Mediterranean country does not meet the rules governing public deficit and government debt, and yet it is using the euro. "That's asking for trouble. Major trouble," said Maas.

Maas, who became the chief financial officer at ING bank after working for the government, called the term "euro crisis" that is now being used in financial circles "bizarre". "It is a crisis in the realm of public finances, not the euro. Look at the exchange rate of the euro against the dollar since 2002 and you can see it is relatively stable."

The markets' disciplinary effect

The single European currency is based on a set of agreements between the members, Maas explained. Of those agreements, 98 are about internal stability and 2 percent are about external issues. "The internal monitors are all still positive," he said. "There is no risk of inflation. So there is no reason to talk about a euro crisis. The problem goes by another name: Greece."

It was fellow Dutchman André Szász who warned about a 'Greek problem' back in 2000, when the EMU allowed the country into the eurozone without it meeting any of the public finance conditions. Szász was one of the founding fathers of EMU. He was a board member of the Dutch central bank, DNB, from 1973 to 1994, and thus involved in setting up the EMS (European Monetary System), which preceded the EMU, and negotiations concerning the single currency.

Now Greece, with the help of speculators, is causing a crisis in that monetary union. Szász downplayed the role of investors. "Speculation doesn't arise in a vacuum, it is a response to policies," he said. "Markets have a useful and disciplinary effect if governments make policies that are unsustainable."

When Greece applied for membership in 2000, the standards should have been upheld, both experts said. Based on the figures the Greeks supplied, they should never have been accepted. Szász said the EMU "falls well short" when it comes to enforcing its own rules. "At the very least, an economic union should entail some budgetary requirements. The problem is these requirements are not enforced."

Countries such as Greece, but Italy and France as well, are still not aware that participating in the EMU means countries become "each other's territory, both monetary and budgetary", Szász explained. "That implication is hard to drive home."

For this reason, Szász is "very happy" the International Monetary Fund is involved in the rescue operation. It supplied one third of the emergency package. "The IMF has a very good record when it comes to compliance with agreements. Budget deficits and government debt will have to be reduced to the agreed levels. The IMF is very much up to that task."

The Germans decide the euro's fate

Cees Maas also welcomes the role of the IMF, and he hopes the current crisis will result in the rules of the EMU finally being respected, meaning countries can no longer have a deficit higher than 3 percent of GDP, or a debt of more than 60 percent.

According to Maas, countries that don't live up to the rules should be put into receivership. "In the Netherlands, we can put municipalities under guardianship, we should be able to do the same in Europe. It is really a question of political will."

Szász pointed out that the euro was never an economic project, but first and foremost a political undertaking. He wrote as much in his book The Road to European Monetary Union in 1999, published when he was a special professor of European studies in Amsterdam. The former central bank director always worked closely with his German counterparts when it came to the Dutch position in the European debate. He still believes German confidence in the European Central Bank is crucial for the future of the euro. "The EMU can only fail if Germany abandons it. But this would be such a traumatic experience, I don't see it happening," said Szász. "I can only imagine such a situation if the German people became uneasy about their currency and got the impression that all the guarantees of the central bank's independence - and of a euro that is as least as strong as their old Deutsche mark - had been withdrawn. [Former German chancellor] Helmut Kohl had good reason to fight like a lion to get the ECB in Frankfort am Main. If the German people really start to doubt and populist parties play into that, they will be far gone."