Celebrations for the 20th anniversary of Europe's common currency, the
euro, are due in January and they will be subdued. The common currency
almost came apart in the aftermath of the 2008 financial crisis and its
vulnerability was baked into the design.
Ashoka Mody, who headed the IMF mission to Ireland during the subsequent Troika programme, recounts the genesis of the misbegotten project in this comprehensive study. He argues that the common currency was poorly designed and poorly managed in the years following the financial crash.
The eurosystem masquerades as ''Economic and Monetary Union'', the preferred moniker invariably employed by its defenders. But it is not a true monetary union even after the grudging repairs implemented since the crisis years from 2010 onwards. The United States is a full-blown monetary union, with a significant federal budget, a federally-issued safe asset, centralised bank supervision and a federal system of deposit insurance. If the banks go bust in Texas, the government of Texas does not have to pick up the pieces: the feds do the job. Nobody worries that the Texas dollar (deposits in bank branches in Texas) might come to be worth less than real dollars in New York or Massachusetts. Nor can the governor of Texas be threatened with expulsion from the dollar zone unless unsecured creditors of bust Texas banks are rescued by Texas taxpayers.
For the complete report click here
Ashoka Mody, who headed the IMF mission to Ireland during the subsequent Troika programme, recounts the genesis of the misbegotten project in this comprehensive study. He argues that the common currency was poorly designed and poorly managed in the years following the financial crash.
The eurosystem masquerades as ''Economic and Monetary Union'', the preferred moniker invariably employed by its defenders. But it is not a true monetary union even after the grudging repairs implemented since the crisis years from 2010 onwards. The United States is a full-blown monetary union, with a significant federal budget, a federally-issued safe asset, centralised bank supervision and a federal system of deposit insurance. If the banks go bust in Texas, the government of Texas does not have to pick up the pieces: the feds do the job. Nobody worries that the Texas dollar (deposits in bank branches in Texas) might come to be worth less than real dollars in New York or Massachusetts. Nor can the governor of Texas be threatened with expulsion from the dollar zone unless unsecured creditors of bust Texas banks are rescued by Texas taxpayers.
For the complete report click here
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