Exciting times indeed!

And throwing up the most unexpected surprises. Such as a decent Larry Elliott piece on matters economic..and in The Guardian no less.

At the heart of his argument about the European problems is that monetary unions don't last without political union. Thus this halfway point, this monetary union alone, isn't a stable position. We must either move forward to full political union (most importantly, fiscal union) or retreat, back to national currencies, where the monetary and political areas are the same.

Now given my vehement euronihilism (a more extreme variant of euroscepticism, it's the belief that the very existence of the EU is a bad idea, whether we're members of it or not) of course I would prefer the second solution. And of course have been saying so for years.

But full political and fiscal union wouldn't actually work anyway: the different economies are so far apart in their reactions to the same external stimuli that, at least at this stage of integration, Europe, even the eurozone alone, simply isn't an optimal currency area.

There have been those who said that it took the US 200 years to become an optimal currency area and it's most certainly true that the greenback didn'y become the exclusive currency until the 1860s. Before that there was the dollar, yes, but there were also private banks issuing currency and, in the earlier days, States.

In short, they got on with building a nation and only adopted one of the attributes of nationhood, a single currency, once they had done so. The EU seems to have thought that this process could be reversed, let's have the currency now (and the flag, the anthem etc) and the nation will naturally follow. Appears that it doesn't quite work that way, eh?

Assuming that the EU manages to survive that long, we might be ready for a single currency in, oooh, 2060 or so?

Actions: Print this article   |   Email to a friend   |   Permalink   |   Comments (1)

Post this entry to:   del.icio.us | Digg | Newsvine | NowPublic | Reddit

Advertisement

Spectator Business | Apollo Magazine

Corporate | Advertising | Privacy | Terms

Spectator, 22 Old Queen Street, London, SW1H 9HP

All Articles and Content Copyright ©2008 by The Spectator | All Rights Reserved