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2010-06-19

A solution to some of current problems in euro zone

Comments on Bill Evans “Europe's dark clouds”, 19/06/2010, http://www.businessspectator.com.au/bs.nsf/Article/WEEKEND-ECONOMIST-Europes-dark-clouds-pd20100618-6J9XJ?OpenDocument&src=sph
While having own currency for troubled members could be a solution, there is no need for a new currency or currencies for any euro members.

The euro zone could initiate intra-euro trade measures that have effective currency effects.

Such measures include allowing a troubled country to have a tariff on imports from other euro members and use the revenue to subsidize its exports.

It will be equivalent to own currency depreciation in a common currency area with no own currency.

Those trade measures, while inconsistent with WTO rules, should be only applied within the euro zone and should be acceptable to euro members as a better alternative to re-creating own currencies for some current euro members.

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