Architect of the Euro, Padoa-Schioppa, Dies

The eurozone's current woes notwithstanding, one of the indicators of the worth of an idea is the number of persons who are attributed to helping create a single currency. For its conceptual underpinnings, American Nobel laureate Robert Mundell is widely regarded as the (Intellectual) "Father of the Euro." Meanwhile, the late Dutchman Wim Duisenberg who died in a swimming pool accident also has an argument for being the "Father of the Euro" after being the first ECB president and seeing its introduction in 13 countries.

It is thus with sadness and more than a little confusion that we must observe the passing of another notable figure in the history of European economic integration, Tommaso Padoa-Schioppa, at the age of 70. Perhaps this political economy Mamma Mia situation is mitigated by him being regarded as the one placing the scaffolding around the currency; its operational infrastructure--hence his recognition as the architect of the single currency. This Italian fellow has been arguing for a single currency since the beginning and has served many important Euro-posts:

Padoa-Schioppa, who fought for the single currency as a catalyst for European integration, served on the ECB’s executive board from 1999 until 2005. He was deputy director general of the Bank of Italy for 13 years, during which time he was passed over for the governorship in favor of Antonio Fazio in 1993. He was named finance minister under Italian Prime Minister Romano Prodi in May 2006, a position he kept until the government collapsed in January 2008.

The central banker completed a seven-year term on the ECB board overseeing the euro at the end of May 2005. The only founding board member to serve longer was Chief Economist Otmar Issing...

In 1988, Padoa-Schioppa served as joint secretary to the Delors Committee, called after the then-president of the European Commission, which was formed to investigate how European Union countries could remove all common trade barriers by introducing a single currency. The committee came up with a three-stage plan that was later included in the 1992 Maastricht Treaty that instituted the single currency.

Concerned that countries might retreat from their commitments to the single currency, Padoa-Schioppa developed a timetable for currency conversion that made it harder for member countries to back out of the project. On the flight to Maastricht, he persuaded Giulio Andreotti, then Italian prime minister, to push for the euro’s initiation in 1999 if a majority of members didn’t agree on a date to start by 1997, according to Matt Marshall in his 1999 book on the euro’s creation called ‘‘The Bank.”

The euro was introduced on Jan. 1, 1999, and was coined “a currency without a state” by Padoa-Schioppa. “I do not think that a single currency is an event for the last days of the history of mankind that simply crowns perfection,” he said in his testimony before the European Parliament in May 1998. “It is something that has to be in reality while reality evolves.”

Padoa-Schioppa was picked to serve as Italian finance minister [during the short-lived Prodi administration] at a time when the country’s economy had stalled for two out of five years and the debt burden had ballooned to the largest in the EU. He focused on cutting government spending, often taking low-cost airlines to international meetings. His efforts to cut spending ensured Italy’s budget deficit fell below the EU limit in 2007 for the first time since 2002. Before him, the annual deficit had widened to 4.3 percent of gross domestic product in 2005, a 10-year high at the time.

Make no mistake: many capable folks fought long and hard for the single currency against naysayers all and sundry. The battle to keep it a viable enterprise goes on.