Luis de Guindos: Integration and convergence - from the peseta to the euro Remarks by Mr Luis de Guindos, Vice-President of the European Central Bank, at an event in honour of the 40th anniversary of the Spanish constitution, organised by the Spanish Ministry of Economy, Madrid, 18 December 2018. * * * This month marks 40 years since Spain began writing the most optimistic chapter of its history1. On 6 December 1978 the Spanish people did more than just vote in favour of a democratic country that would uphold the values of the rule of law and equality. Our support for the constitution also laid the foundations for Spain to modernise its economy and become an integrated part of the European family. In addition to safeguarding fundamental rights and civil liberties, Section 38 of the constitution states that “free enterprise is recognised within the framework of a market economy” and confirms that the public authorities guarantee its exercise. In practical terms, this meant Spain would align itself with the western model of parliamentary democracy, based on a market economy and free competition and underpinned by the social rule of law. A little more than a year later, negotiations began for Spain to join the European Economic Community, a historic milestone that would be achieved in 1986. But this wasn’t an easy road to follow.
The arrival of the euro also had a positive effect on growth, in spite of the serious difficulties during the crisis. Since 1999, GDP per capita has been growing at 1.2%, which is 0.1% higher than in the other euro area countries and much higher than during the early years of our democracy. Recently, some people have tried to blame the euro for the length of the financial crisis in Spain and have advocated control over monetary policy interest rates and exchange rates. What they 1/2  BIS central bankers' speeches  often forget is that being a member of the euro area enables Spanish households and businesses to benefit from lower real interest rates, lower inflation rates and reduced macroeconomic volatility, all of which boost productive investments and make a vital contribution to the sustainability of public finances. Furthermore, it is not true that structural currency devaluations solve economic crises. Devaluations are short-term measures. In the long term, the competitive boost they provide is eroded by the higher inflation they cause. And, in a complex system of global production chains like the one we have today, devaluations can make it harder for businesses to plan. The euro is also the second-most important currency in the international monetary system3, which strengthens Spain’s credibility in a global context. It’s true that the crisis revealed significant institutional shortcomings in the structure of the monetary union, but it’s equally true that European countries have taken this on board and carried out substantial reforms.