I recently read this report looking again at the proposal for a Hard ECU as a alternative to the Delors Plan (which resulted in the euro single currency) as a route to European Economic and Monetary Union. The Hard ECU would have established fixed-but-adjustable exchange rates between the national currencies and the ECU, with national currencies able to de-value but not re-value against the ECU. The intention was that market forces rather than political fiat would push EU economies to converge, which would then allowed for (but not require) the possibility of a single currency. (I'm not an economist, so I must admit there were a lot of details that went over my head!)
The author suggests a number of reasons the Hard ECU lost out (coming too late, coming from Britain, but most importantly being too integrationist for euro-skeptics and not integrationist enough for europhiles).
So the challenge is three-fold:
The author suggests a number of reasons the Hard ECU lost out (coming too late, coming from Britain, but most importantly being too integrationist for euro-skeptics and not integrationist enough for europhiles).
So the challenge is three-fold:
- Are there circumstance in which the Hard ECU would have been adopted?
- If it had been, what would the European economy look like now?
- Explain how it would work in a way that people who aren't economics professors can understand!