The French currency expert Jacques Rueff wrote in 1949: “L’Europe se fera par la Monnaie ou ne se fera pas.” He meant that Europe as a political entity about money (the monetary union) would have to be introduced – or then just do not. After that, the process of European integration would irreversibly and Europe would be to indissoluble community of fate. Is the fact so? If a withdrawal of Greece from the euro zone, so the Grexit unthinkable? Twice no!
The history teaches us that neither money nor connects together. National money was usually only after the creation of a state, and it was neither civil war nor failed states prevent. It need only recall the former Yugoslavia or the Soviet Union. Jacques Rueffs assertion does not coincide with the historic experience – and therefore it is false
Common Money does not connect
Recall: In the past, suffered in Europe two Community currencies shipwreck. , Both the Latin Monetary Union (1865-1914) as well as the Scandinavian Monetary Union (1872-1924) broke because some members did not keep to the rules. While kicked in the case of the Latin Monetary Union Greece for fudging, committed during the later Scandinavian version Denmark and Norway breach.
Of itself, the existence of a single currency can not be derived, the expectation of a political cohesion per se. These indeed also lacks the administrative and constitutional framework. This view is among economists long been common, but no matter seems Rueffs postulate still a great influence on the policy of the European Union to exercise -. As well as in the current discussion about the whereabouts of Greece in the European Monetary Union (EMU)
While in the EU headquarters and the European Central Bank continue to unswervingly the mantra of the indissoluble euro area is repeated – even after the meantime even the International Monetary Fund has unnerved thrown in the towel – goes, forget that a Greek exit from the euro mainly benefits would result.
Grexit help from the export crisis
An exit would bring a new (or old) currency to Greece, which would be much weaker against the European single currency. The winners would be Greek entrepreneurs who could export so favorable. Olives, wine, tomatoes, cheese and Vacations would unbeatably cheap. Of course, exports would not bring alone the country out of crisis. For this, the export share at just over 13 percent of gross domestic product – compare to export champion Germany (almost 43 percent) and the Netherlands (around 70 percent) – not large enough
would on the other hand, foreign products. much more expensive, which would reduce their imports because the weak currency would act as an import tax. In addition, chances are that after a sharp devaluation foreign companies would invest in Hellas, many times greater than if the land would remain in the euro zone would be. New, much-needed jobs could thus arise.
Not only the European Monetary Union would thus benefit from a Grexit, but clearly also Greece. This means, in effect, nothing more than that a Grexit the credibility of the single currency and the European Union would be more beneficial than a trapped in the euro Greece. Would have to be sacrificed only one, namely the mantra of the indissoluble monetary union.
The Euro caught
Without its own currency Greece may now only about painful internal devaluation try to defuse the liquidity shortage. However, it is hardly room available to reduce the wages, pensions and prices substantially. Hellas has shown in the past that it is not ready to really push through tough reforms. To accept now with a further aid package back to business as usual, the imbalances would only further cemented, if not worse.
As a way out of the euro zone would remain in this scenario only nor the introduction of a transfer union with cash flows from north to south. At the same time the risk would increase that the euro area degenerates into a debt union. Whether this transformation would be expected of the other EMU members politically, probably is more of a rhetorical question.
And what would be the consequences of a Grexit for the remainder of EMU? With a share of less than 2 percent of Greece in the euro gross domestic product, the remaining members would hold new 2 percent of the Greek currency. This proportion appears
manageable. Also, the expected in this case drop in exports to Greece hardly arises. For example, the current proportion of Greece at all German exports is just at half a percent.
Europe Errors
Despite these valid arguments for an exit is in Brussels and elsewhere continues to try everything, to keep Greece in the currency union. Another mantra that has been etched in the minds of politicians since the introduction of the euro – namely, that money would establish identity – appears to be just as adamant as that from the indissoluble euro area. Here is gambled by this adherence to errors in Europe a great opportunity for the long-term currency project. For: A long term functioning monetary (and political) project can not be built on the foundations of economic (and political) errors
Dr.. Adriano B. Lucatelli is Swiss asset manager and lecturer at the University of Zurich. You can follow the author on Twitter.
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