Читать книгу Foreign Exchange: The Complete Deal - James McDowell. Sharpe - Страница 15

The euro experience has been broadly positive and the euro now ranks as the second reserve currency behind the dollar. The major criticism of it has been the one size-fits-all monetary policy, but this has also crucially been allied to failures to adjust fiscal policy. This was clearly evident in 2010 in Ireland, Greece and Portugal, which prompted a sell off in the euro and speculation of a break up of the entire union.

The need for fiscal convergence was recognised at the outset of the European Monetary Union but subsequently ignored or manipulated by politicians. The Maastricht Treaty signed in 1992 said that governments had to have budget deficits of no more than 3% of Gross Domestic Product (GDP) and a national debt of less than 60% of GDP (it was known as a stability pact). The importance of balance between monetary and fiscal policy has never been more clearly evident. Unfortunately, the euro-zone countries have behaved as if they were each managing their own currencies.

Each country appears to go its own way in raising taxes or borrowing money. In the past, imbalances would be adjusted over time through an appreciation or devaluation of the currency. This option is no longer available and in the case of Greece the only option was severe austerity measures, including cuts in wages and pensions.

Since the introduction of the Maastricht Treaty the deficit rules have been violated over 40 times. Greece tops the list in this respect. It has only once managed to push its deficit below 3% and this was through creative accounting in 2006. Also, Greece has raised debt through complex structures which have not been included in official statistics.

Ironically, it was Germany that was the second member state, after Portugal, to be subjected to an excessive deficit procedure by the European Union. It was also the German government who steered an “improvement in the implementation of the Stability and Growth Pact” at a special meeting of the Ecofin Council on 20 March 2005. This improvement could only be seen from a political viewpoint as it allowed more frequent exceptional and temporary violations of the deficit rules.

The Bundesbank declared that the changes would “decisively weaken the rules of sound financial policy” and the “goal of achieving sustainable public finances in all member states of the monetary union is being jeopardised”. This judgement has been borne out by recent events in Greece and other periphery countries, notably Ireland and Portugal. It has highlighted that while there is a common monetary policy the members of the euro lack a coherent and credible shared economic policy. It has shown that even small countries can jeopardise the entire currency project. Politically, it has prompted a change in awareness that its members are dependent on one other.