DBWI: What if the EU launched a single currency?

As you all know the main story gripping the financial press has been the trouble caused by gyrations in the value of European currencies. Can you imagine the pain suffered by Greeks whose currency has devalued 50% against the Deutsche Mark in just a month? Also, if Berlusconi wasn't too busy with Bunga Bunga perhaps the plunge in the Lira wouldn't be so terrible. Maybe if the single European currency thought about in the 1980s was adopted, we wouldn't be seeing such problems.
 
The kind of problems that Greece is suffering today would simply not happen in a single currency scenario. This is because a high degree of fiscal discipline would be required to join the currency in the first place, and you wouldn't have countries falsifying their current accounts, borrowing excessive amounts of money, or allowing large proportions of their citzenry to evade taxes.

British Chancellor, Nick Clegg, clearly explained this in several of his speeches.
 
The kind of problems that Greece is suffering today would simply not happen in a single currency scenario. This is because a high degree of fiscal discipline would be required to join the currency in the first place, and you wouldn't have countries falsifying their current accounts, borrowing excessive amounts of money, or allowing large proportions of their citzenry to evade taxes.

British Chancellor, Nick Clegg, clearly explained this in several of his speeches.

Well, that's assuming they don't cook the books when they join. According to the NY Times, Schwab-Lehman had helped the Greek government conceal significant "irregularities" in their budget and their debt structure, as well as create "growth' out of thin air. Ol' Chuck is going to jail for doing similar things with his own books in the USA. It's a good thing we got a strong leader like Hillary in charge.
 
A joint currency might have solved some of the problems of reunified Germany. Imagine if their political leadership could have effectively devaluated D-Mark 20-25% "durch die Hintertür", avoiding the following stagnation of their import industry and the rise of unemployment. It might just have been enough to enable following governments to start necessary reforms so that Germany and her WEU partners could have remained as a strong, competitive economy in the global markets.

Then again these are the same people who claim that China, not India, could have transformed itself into a global economic powerhouse and embrazed capitalism if only the reform attempts of Deng Xiaoping had been approved by the Party leadership.

But such utopia would have been far from certain. Imagine if the French would have lifted their veto for British membership in EFTA already in 1969 - it is arguelable that Denmark would have followed suit and joined to this organization, and Nordek as we know it and the basis for later Scandinavian Monetary Union would have never been created in the first place! Without the Nordic example, later attempts to unify states of central Europe to any kind of monetary union would have been much harder.
 
Would the Greek financial crisis have even happened in the first place? A unified currency zone would have lead to a much more unified European economy, with ease of trade and commerce making it unlikely that any one country's economy would be that much worse than the rest. More likely, Greece would have suffered a significant recession of the sort that's happening in Germany and France, not the much deeper recession it's suffering IOTL, so unemployment and lost tax revenue wouldn't be as pressing.

A unified currency would also have allowed Greece to borrow at much lower rates. IIRC, the immediate trigger to the Greek financial crisis was lenders anticipating the Greek devaluation and demanding much higher interest rates to compensation for currency risks. If Greek debt were denominated in EU Marks rather than Drachmas, they likely could have continued to borrow at reasonable rates, giving them the cushion they'd need to implement a reasonable austerity program to fix their long-term fiscal situation. Also worth noting is that a unified EU currency implies an EU central bank that could serve as a lender-of-last-resort to backstop the Greek government's fiscal situation.
 
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