It is a “currency without a state”, in which a group of fiscally sovereign countries shares a single currency and a single central bank issuing fiat paper money, yet evidently lacks a clear monetary hegemon. So the euro is not just a different version of the gold standard, as Balczerowicz, de Soto and many others argue. Not least because of the fact that unlike any commodity standard, the euro lacks anything resembling an ultimate numéraire. And more importantly, within the eurozone Germany is not a monetary hegemon anymore. Yes, the German mark and the Bundesbank were clear monetary hegemons in Western Europe in the pre-euro era. And remember, it was argued that the euro would become “the German mark for the whole of Europe” in the many public debates that went on in Germany prior to its introduction. Yet it is evident that it could not and cannot function in this way. Yes, monetary unification in Europe does not make much sense without Germany. This is still true. But my definition of a clear hegemon is: it should have the right to set the rules and to force others to behave accordingly, the right to enforce the rules. And it has to have the right even to breach the rules itself and still not allow the others to breach the very same rules. But this is not true for Germany after the introduction of the euro.
So the only thing that remains rather difficult to understand is the former hegemon’s efforts to resolve what is, for it, the awkward situation of non-compliance with and infringement of the rules of the club (including its own infringements) by creating new and ostensibly better rules for the same club with the same members. Yes, Otmar Issing, for instance, rightly warns against Eurobonds and simple fiscal unification, but with the European Stability Mechanism and the planned banking union we are effectively creating something like common fiscal liabilities and common bonds, just with less transparency. Arguably, the German mark was – from a monetary point of view – a rather well administered pan-European public good. After the euro, this public good became overconsumed. Philipp  2  BIS central bankers’ speeches  Bagus, sitting today here in this room, argues that the euro is a classical example of a “tragedy of the commons” from the start, and that the smaller and weaker countries therefore inevitably ended up racing to make maximum use of the commons for their own benefit at the expense of the rest, thereby destroying this shared asset. The German mark can indeed be viewed as a sort of public good that became the subject of decisions made outside the public sphere in Germany and hence was fundamentally transformed. The average quality of the public good called monetary stability and good currency in the eurozone will very probably go down with the ultimate demise of the former European monetary hegemon.