1 / 8

Free Market Road Show Madrid, June 17 th , 2013

Free Market Road Show Madrid, June 17 th , 2013. “Is more Europe better Europe?” P. Schwartz “ Single currency versus common currency ”. “ Is there an alternative to the Troika?”. The € as politics. The crisis of the euro has thrown doubt on Jean Monnet method to foster European Unity

mali
Télécharger la présentation

Free Market Road Show Madrid, June 17 th , 2013

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Free Market Road Show Madrid, June 17th, 2013 “Is more Europe better Europe?”P. Schwartz “Single currencyversuscommoncurrency” “Is there an alternative to the Troika?”

  2. The € as politics • The crisis of the euro has thrown doubt on Jean Monnet method to foster European Unity • The path of spontaneous economic cooperation abandoned • Economics and the € as a political instrument to foster European unity • The € is instead it is increasing tensions among euro-members and heightening the feeling of a democratic deficit

  3. Mundell conditions for a legal tender money • The Stability and Growth Pact (1997) • Applies Maastricht conditions to existing members • Deficit < 3% GDP • Sovereign debt < 60% GDP • Later modified to suit France and Germany (2005) • ECB rules • Cannot lend to EC institution or member-states • Must preserve the purchasing power of the currency ( self-imposed ΔP ≈ 2%) • Real GDP growth not in its remit • No bailing-out member-states

  4. How the € functioned in fact • No single market and no convergence • Foreign deficits not mentioned • Target II and the finance of current BoP deficits • No bailing out of member states disregarded • No ECB financing of States and national banks flouted • ECB engaged in countercyclical monetary policy

  5. The hard ECU, a parallel currency • John Major’s ‘hard ecu’ in 1990: a common European currency instead of the single one defended by Jacques Delors. • An electronic money to be used by business and tourists • Initially, value equal to a basket of European currencies • Could not subsequently have been devalued relative to any member currency. • This would have made it as hard as the hardest member currency.

  6. Two Currencies in Cyprus • Cyprus residents obliged to use two currencies: the German € and the local € • The fixed exchange rate between the two is defended by capital controls and limits on bank account disposal • With a flexible exchange rate between the free € and the stamped € no need for controls • All payments between residents in stamped €

  7. The ECB & national central banks with parallel currencies • The ECB will be able to follow an orthodox monetary polity regardless of public deficits and private leveraging • National central banks will finance national States at their own risk • Danger of the local currency becoming small change • The € a choice currency shaming profligate national states • National States in crisis will be able to devalue • Devaluation a form of austerity

  8. Rafael del Pino Research Professor www.pedroschwartz.com

More Related