Single currency: Time to think the unthinkable

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Single currency: Time to think the unthinkable

My optimism depends on the EU's single market surviving the demise of Emu.

Of course, senior EU politicians daren't even think about it. Most of them still see Europe's future in terms of the Maastricht treaty's objectives. But as I argued in this column last month, it's odds-on the timetable for European monetary union (Emu) will have to be put back. What happens to Europe then? Is it Armageddon, as German chancellor Helmut Kohl sometimes seems to suggest. I think not.


But my optimism depends on the EU's single market surviving the demise of Emu. The single market is the foundation of internal commerce, designed in the mid-1980s for completion in 1992. There are still many barriers, but they get smaller each year.


Supporters of a single currency say Emu is essential to the single market. True, big swings in real exchange rates in the EU would encourage business in strong-currency countries to press for import controls. But trade flows fairly freely between the US and Canada (and increasingly with Mexico), and these countries have separate currencies. There is a danger that frustrated fans of Maastricht might use the absence of a single currency as an excuse for weakening the single market, but there is no logical reason why they should do so.



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