In or Out of the Euro?…It Doesn’t Matter!

Back in 1999 I wrote that the proposed Euro-system simply changed the unit of account and would have no significant impact on Euroland growth. Ultimately, I argued, it would be structural factors such as education and technology, and fiscal relations such as taxes and government borrowing, that would determine the winners and losers from the exercise. I concluded that there was no reason to adopt the Euro…

…12 years later, and somewhat vindicated by recent events, I make the same argument with a slightly different conclusion. The Euro is still just a unit of account – structural and fiscal factors are the only things that matter – but now that Euroland has the Euro in place, there is no reason to abandon it.

This conclusion is anathema to every Euro-government official and Central Banker, but it is practical advice. Rather than tinker with what the region’s notes and coins look like, START FOCUSING ON THE REAL ECONOMY!