The euro is twenty-five years old and works remarkably well by most measures.

It is the world's second reserve currency. It has survived a sovereign debt crisis that threatened to break it apart, a global pandemic, an energy shock, and an inflation surge that would have destroyed weaker monetary arrangements. The 350 million people who use it can travel from Lisbon to Tallinn — through eleven countries — without exchanging currency. Businesses price their contracts in a single unit across an area larger than the United States.

And yet the euro was always described, by those who understood it best, as unfinished. Twenty-five years on, that description remains accurate.

What is missing is not cosmetic. The missing pieces are structural — and their absence explains some of the euro's most persistent and puzzling behaviours.

When Americans think about a currency union, they think about the dollar. One country, one central bank, one Treasury, one set of fiscal rules. If California falls into recession while Texas booms, federal tax revenues automatically redistribute between them. Unemployment insurance, federal spending, and transfer payments move money from stronger states to weaker ones without anyone having to negotiate it.

This automatic stabilisation mechanism does not exist in the eurozone.

The European Central Bank sets one interest rate for twenty economies that routinely move at different speeds. When Germany is growing strongly and needs tighter monetary policy, that same tight policy applies to Greece or Italy or Spain, which may be in recession and need stimulus instead. There is no override mechanism. There is no valve.

The Maastricht Treaty of 1992, which created the legal basis for the euro, prohibited the ECB from financing member state governments directly and prohibited EU institutions from assuming member state debts. These prohibitions were designed to prevent moral hazard — the risk that shared monetary arrangements would allow governments to run unsustainable deficits knowing that their partners would ultimately bail them out.

The prohibitions achieved their goal. They also meant that when the sovereign debt crisis hit Greece, Ireland, Portugal, and Spain between 2010 and 2012, there was no automatic European mechanism to respond. There was no eurozone Treasury to issue bonds and distribute funds. There was only a series of improvised rescue packages assembled through exhausting political negotiation, attached to austerity conditions that deepened the recessions they were meant to address.

The ECB's president at the time, Mario Draghi, eventually stabilised the crisis in 2012 with three words: "whatever it takes." He announced that the ECB would do whatever was necessary to preserve the euro. The announcement alone was sufficient. Markets, which had been betting on eurozone breakup, reversed course.

Three words from one man's mouth should not be the primary load-bearing structure of a continental monetary system. But for a period, they were.

The sovereign debt crisis produced a wave of institutional construction.

The European Stability Mechanism — a permanent rescue fund with a lending capacity of €500 billion — replaced the improvised crisis vehicles. The Banking Union brought European banking supervision under the ECB's direct authority, reducing the risk that weak banks in one country could destabilise the system. The Single Resolution Mechanism created a framework for winding down failing banks without requiring government bailouts.

These were real improvements. The eurozone of 2015 was more robust than the eurozone of 2009.

But the fundamental gap remained. There was still no common fiscal capacity — no eurozone budget large enough to provide macroeconomic stabilisation, no common unemployment insurance, no permanent mechanism for transferring resources from stronger to weaker economies during downturns.

The COVID-19 pandemic produced the closest thing to a breakthrough. The Next Generation EU programme — €750 billion financed through common European debt issuance — was the first time the European institutions had borrowed at scale on behalf of member states. The money flowed to countries hit hardest by the pandemic, providing a fiscal stimulus that no individual government could have managed alone.

Whether this was a one-time emergency measure or the beginning of a new fiscal architecture depends on whom you ask, and when. Von der Leyen's Commission framed it as a precedent. The governments of the Netherlands, Austria, and the Scandinavian countries insisted it was exceptional and should not be repeated. The debate remains unresolved. The repayment schedule on the Next Generation EU debt runs to 2058, which means the argument about what it represents will last at least another generation.

There is a second architectural deficit that receives less political attention but matters enormously for Europe's economic future.

European capital markets are deep nationally but fragmented continentally. A startup in Amsterdam cannot easily access the same pool of risk capital as a startup in San Jose. A pension fund in Munich faces regulatory barriers to investing in infrastructure projects in Poland. The savings of European households — which are substantial — are not efficiently channelled into European investment.

The United States capital market is roughly two and a half times the size of Europe's, despite the two economies being of comparable scale. This gap shows up in the funding of new companies, the development of new technologies, and the ability to scale businesses from startup to global competitor within a single market.

The Draghi report, published in late 2024, identified this as one of Europe's most serious structural weaknesses. The Capital Markets Union — a project launched in 2015 with the goal of integrating European capital markets — has made slow progress. National regulators guard their jurisdictions. Tax systems differ. Insolvency laws vary. The accumulated friction of twenty-seven separate financial regulatory environments resists easy harmonisation.

This matters for the euro because a deep, integrated capital market performs some of the same shock-absorbing functions that a federal fiscal system performs. If a country in the eurozone suffers an asymmetric shock — a collapse in one sector, a banking crisis, an external trade disruption — investors can shift capital away, and affected households can draw down savings or access credit from the broader European system. Without that integration, the burden falls on fiscal policy, and fiscal policy in the eurozone remains national.

The reason the euro's missing pieces remain missing is not technical. The economists know what is needed. It is political.

A genuine fiscal union — one in which eurozone members pool a significant share of their budgetary resources and accept transfers to countries in difficulty — requires German, Dutch, and Finnish taxpayers to accept permanent liability for the fiscal choices of Italian, Greek, and Spanish governments. This is, to put it mildly, a difficult political proposition in creditor countries.

The counter-argument — that incomplete monetary union creates recurring crises that are ultimately more expensive for creditors than permanent risk-sharing would be — is analytically persuasive and politically inert. The electorate that votes in German federal elections does not experience the costs of eurozone fragility in a way that connects causally to the solution.

This is a structural feature of European integration: the costs of incompleteness are diffuse and delayed, while the costs of completing the architecture are concentrated and immediate. The politics therefore systematically underinvests in the architecture.

The result is a monetary union that works well enough most of the time, survives crises through improvisation and political will, and remains perpetually one bad recession away from another round of existential questions.

A small business owner in Ljubljana once described the euro to me in terms I have not heard improved upon since.

Before Slovenia adopted the euro in 2007, he said, he spent a significant part of every working week managing currency exposure. His suppliers were in Germany and Austria. His customers were across the former Yugoslavia, paying in various currencies at various exchange rates. Every invoice was a small hedge calculation. Every delayed payment carried currency risk. He employed a part-time accountant whose primary job was tracking the tolar's movements against the deutschmark.

After the euro: none of that. His German supplier invoiced him in the same currency he used to pay his Ljubljana staff. His price list stopped changing every time a central bank moved.

"The euro gave me back about four hours a week," he said. "And it made me stop thinking about things that have nothing to do with my actual business."

This is the euro's most underappreciated achievement — not the macro-economics of reserve currency status or the geopolitics of monetary sovereignty, but the accumulated reduction in friction for tens of millions of businesses and individuals across the continent.

It does not resolve the architectural questions. But it explains why, despite those questions, abolishing the euro would be a practical catastrophe for the people who use it.

The Next Generation EU bonds mature between 2028 and 2058. This repayment schedule, running more than three decades into the future, is often discussed as a financial detail. It is also a political commitment.

Common European debt that runs to 2058 means that the institution which issued it — and the political consensus that made it possible — must survive for at least another generation. Governments that repay common debt together are institutionally linked in ways that governments which merely trade together are not.

Whether this constitutes a genuine step toward fiscal union or a one-off anomaly will be determined by what happens next time Europe faces a crisis large enough to demand a response that no individual government can provide alone. The repayment schedule does not answer the question. It extends the timeframe within which the question will have to be answered.

The euro works because enough people believe it will — and the architecture exists, so far, to make that belief self-fulfilling.