Poorer countries are alwaya going to have to confront the Euro’s Sword of Damocles.
On the one hand, the Euro gives them a stable currency that can lead to an increased amount of exports and increased investment.
The downside is that your ability to manage monetary policy is extremely limited.
If we look at Greece, had it not been on the Euro, after its economy collapsed this would have lead to a devaluing of its currency. This would’ve made its exports more attractive, and its tourism too.
Instead, they were left with a disproportionately strong (relative to their economy) currency, with their economy going to hell. It was the worst of both worlds.
I think the way around this is for the weaker economies in the EU to be doubly reliant on the “save during good times, spend during bad times” economic policy.
If by that, he means the exact reverse, then he is right.
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Sadly, it will not. Check Italy, Greece, Spain, …
Poorer countries are alwaya going to have to confront the Euro’s Sword of Damocles.
On the one hand, the Euro gives them a stable currency that can lead to an increased amount of exports and increased investment.
The downside is that your ability to manage monetary policy is extremely limited.
If we look at Greece, had it not been on the Euro, after its economy collapsed this would have lead to a devaluing of its currency. This would’ve made its exports more attractive, and its tourism too.
Instead, they were left with a disproportionately strong (relative to their economy) currency, with their economy going to hell. It was the worst of both worlds.
I think the way around this is for the weaker economies in the EU to be doubly reliant on the “save during good times, spend during bad times” economic policy.
If by that, he means the exact reverse, then he is right.