Photo Gallery The Birth Defects of a Common Currency
Chancellor Angela Merkel together with Italian Prime Minister Mario Monti. Italian sovereign debt is vastly higher than the maximum allowed by the Maastricht Treaty which governs the euro -- as it was when the euro was launched in 1998. Policy makers simply ignored the problems.
The European common currency was hailed when it was launched as a unit of account in 1999 and as a real currency in 2002. But policy makers failed to knit member states more closely together, failing to provide the euro with the political backing it needs. Those problems have come back to haunt the euro zone in these times of crisis.
Many German officials warned Chancellor Helmut Kohl of the debt reduction problems facing Italy. But with an election approaching in 1998, Kohl wanted to finalize the euro agreement. Here, Foreign Minister Hans-Dietrich Genscher (seated, left) and Finance Minister Theo Waigel (seated, right) signing the Maastricht Treaty, which provides the legal underpinnings for the European common currency.
Chancellor Helmut Kohl and Italian Prime Minister Romano Prodi. Germany hoped that Italy was embarking upon the road of austerity in 1997. But it proved to be a short-lived journey.
