A Quote by Dalia Grybauskaite
For a small open economy that trades mostly with the euro zone it makes absolute sense to be part of the currency union. Our currency has already pegged to the euro since 2002. We don't have an independent monetary policy. We are regulated by the European Central Bank in Frankfurt, but we are not able to reap all the profits. Our businesses want to save the transaction costs.
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There is a proposal to divide the currency zone into a north and a south euro. There is also the idea of setting up a core monetary union in the middle of Europe. I disapprove of these debates. Instead, we should devote all of our efforts to supplementing the monetary union with a political union.
I'm not trying to be diplomatic. I'm trying to be more nuanced and realistic. I think there has to be a serious examination of the shortcomings of the Euro structure. Euro central institutions, whether it be fiscal policy, monetary policy, financial regulation, are simply not as robust as they are in a currency that has a national government behind it.
Look at Ukraine. Its currency, the hernia, is plunging. The euro is really in a problem. Greece is problematic as to whether it can pay the IMF, which is threatening not to be part of the troika with the European Central Bank and the European Union making more loans to enable Greece to pay the bondholders and the banks. Britain is having a referendum as to whether to withdraw from the European Union, and it looks more and more like it may do so. So the world's politics are in turmoil.
We link our future to the euro, to the euro zone, and to the European Union while being the nearest neighbor of the United Kingdom with, obviously, a common travel area and a very close working relationship with the U.K.
Thanks to the euro, our pockets will soon hold solid evidence of a European identity. We need to build on this, and make the euro more than a currency and Europe more than a territory... In the next six months, we will talk a lot about political union, and rightly so. Political union is inseparable from economic union. Stronger growth and Euorpean integration are related issues. In both areas we will take concrete steps forward.
The lesson for Asia is; if you have a central bank, have a floating exchange rate; if you want to have a fixed exchange rate, abolish your central bank and adopt a currency board instead. Either extreme; a fixed exchange rate through a currency board, but no central bank, or a central bank plus truly floating exchange rates; either of those is a tenable arrangement. But a pegged exchange rate with a central bank is a recipe for trouble.
Europe unified its monetary policy through the euro before it unified politically, therefore sustaining member countries' abilities to pursue the kind of independent fiscal policies that can strain a joint currency.
There was a real fear that a euro-zone bank might fail, that we'd have a sovereign debt problem in one of the larger European economies. That's dissipated, thanks largely to the action of the European Central Bank.
Britain is not part of the single currency. That is a decision we have taken, a voluntary decision of this country, but as a result are part of a European Union 19 of whose members are rapidly integrating, creating political, fiscal, monetary, economic union to make their currency work. And that is increasingly rubbing up against the operation.
We will work to modify and remove some European parameters, but regarding the euro, I remain convinced that the single currency is destined to end: not because I want it but because the facts, common sense, and the real economy dictate it.
At the time of the formation of the euro, I would say most American economists said that's not a good idea; that's not a currency area that makes sense. And the answer from Europe was, 'How is Missouri and Mississippi a currency area?' But the flaw in that was not recognizing the importance of mobility.
I hold all idea of regulating the currency to be an absurdity; the very terms of regulating the currency and managing the currency I look upon to be an absurdity; the currency should regulate itself; it must be regulated by the trade and commerce of the world; I would neither allow the Bank of England nor any private banks to have what is called the management of the currency.
I think that the tying of the Montenegrin economy with the euro is a much better option than the adventure of printing our own currency.
A national currency, with the Euro as a common currency - that wouldn't bother me.
I don't want euro bonds that serve to mutualize the entire debt of the countries in the euro zone. That can only work in the longer-term. I want euro bonds to be used to finance targeted investments in future-oriented growth projects. It isn't the same thing. Let's call them 'project bonds' instead of euro bonds.
It is the entire euro zone system which is under threat at the moment, not just a few small countries anymore... Our euro is under threat. The changing situation needs a quick and immediate reaction.
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