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Why Some European Countries Are Resistant to Adopting the Euro As Their Currency

Friday, June 3, 2011

Why Some European Countries Are Resistant to Adopting the Euro As Their Currency
By Hobson Tarrant

The principle of having a single currency throughout the adjoining sovereign nations of Europe must have always sounded attractive if you were a tourist struggling to change currencies economically at every border or if you were blessed to be a politician whose status would change overnight from being a little fish in a small pond to a big fish in the vast European fish tank.

However as the Euro project starts to falter some countries such as Britain are thanking the stars that the peoples wishes to retain sterling were for once listened too whilst the weaker economies such as Greece and the large financial powerhouse of Germany rue the day their pen was ever put to paper.

Let us be fair that in the simplest of terms the ability for the major European economies to harness their countries wealth through monetary union to raise up the flagging nations to one European standard sounds admirable and if it were just a question of placing the money where it was needed the plan may have worked, but as is often the case where political desire outweighs common sense the realities of such a scheme were not properly thought through.

At every stage of the development of the Euro a wary eye could easily spot the early stages of an accident waiting to happen.

Vital issues such as Fiscal Union (a common rule of financial management) were brushed under the carpet to be considered at some later date.

European parliamentary members with negligible training or experience were hoisted to positions of high power of the project purely on grounds of internal popularity or as a strategic sweetener.

The "What ifs" of good management practice just weren't explored for fear that case sensitive issues may be uncovered:

What if - Economies were weak because of top level corruption.

What if - The peoples of a member state refused to tow the line.

What if - A geographically strategic state created an economical threat to the Euro.

An outside observer could also ask who would actually police and monitor this new Euro super currency, the answer being primarily the European Parliament itself, does not install confidence when this very body has failed to pass an audit without qualification since its first days of formation.

Greece having been dropped into a deep hole by its former governing body cannot cut much deeper than it has without an outright mutiny of it's citizens, its gross national product almost entirely dependent upon tourism, teeters on a knife edge as visitors head elsewhere due to the countries financial insecurity and Europe itself enforces a punitive loan policy that with interest added will ensure the Greek Islands under the Euro will remain a threat indefinitely.

Add to this similar tales from Portugal, Spain, Italy, Belgium and who knows where else and it becomes no surprise that Germany the main net provider of wealth into this pot shows it's own signs of struggle to commit it's hard working population to comparative austerity whilst trying to keep these other struggling states afloat.

A flexible monetary mechanism would have been devised allowing the weaker members to protect their position by devaluation against a higher rate achieved by the stronger players.

A method of extraction from the Euro should also have been created for members who can't or won't maintain the criteria needed, however without this economy collapse or sovereign debt default remain the only ultimate options available to struggling states from which the resultant seismic wave of damage would not only be felt in Europe but throughout the financial markets of the world.

It is no wonder that several countries have chosen not to adopt the Euro as their currency and as the history books are written they will give thanks that this was their choice.

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