Time to change the rules (3)
Archived Articles | 18 Dec 2008  | EWR
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Edward Lucas

Most people who give the matter any thought agree: one of the main rules for countries wanting to join the euro is perverse. Yet adopting the common currency has gone from seeming a matter of national pride to national necessity, as the financial turmoil has highlighted the costs and risks that small countries face by keeping their national currencies. For places like the Baltic states and Bulgaria (which already peg their currencies to the euro) maintaining the current regime carries extra burdens and no benefits.

Europe.view column, Dec 18th 2008, from Economist.com

Click here for Mr Lucas’ complete article
http://www.economist.com/daily...
 
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Peter19 Dec 2008 15:20
I think the euro is finished anyways with the coming depression. One of the major causes of the uprising in Greece is the adoption of the euro by it's corrupt politicians which has been a disaster for their tourism-based economy.
Maxim19 Dec 2008 13:19
The threats emanating from Brussels and Europe generally about small currencies are designed to deliver the final blow to these nations' level of independence. Structurally, the Kroon has done well and benefited the country enormously. There is no need for Estonians to feel threatened. However, it is politically motivated to push for enough unease about the future of the kroon that is now the key factor behind Ansip's push to rid Estonia of her currency. A common currency has proven to deliver considerable losses to peoples savings in other countries where the Euro has been adopted, and only a fool would think that no rounding off process would not be called for in Estonia. In fact for this reason alone, what may be left of any personal savings would get wiped off the slate altogether as Estonians would need to fork out of their own pockets to make the Euro a realistic proposition here. I think every effort should be made to delay the arrival of the Euro until such time that Estonian wages reach a level equivalent to that of their European counterparts. I hope Lucas doesn't wish to see an economic implosion happening in Eesti, although it certainly would occur if Lucas had his way.
just18 Dec 2008 15:31
Lucas is usually pretty good, but he is off the mark here.
Once Estonia is tied to the euro with no flexibility, any ability to develop its own internal monetary policy to improve the lot of its citizens has evaporated.
Though the kroon is currently linked to the euro, if the Estonian governement allowed it to float, it would undoubtedly go lower, giving Estonia a competitive advantage in the current economic climate.

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