Formulação da pergunta por Júlio Marques Mota
À pergunta formulada
Eis pois a questão que levanto aqui e agora, uma vez que Portugal se recusa viver em autarcia como um país pequeno que é, uma vez que a saída da zona euro unilateral é também ela inaceitável, uma vez que a saída apoiada pela UE é, por seu lado, impraticável, e tendo ainda em conta o conjunto, caracterizado pela ignorância, ganância e maldade, destes que nos governam, seja a nível regional seja a nível nacional, então o que fazer para não se morrer, mesmo que lentamente (!) com estas políticas que estão e estão mesmo para durar e talvez mais de dez anos, de acordo com as declarações de Jens Weidmann ao Wall Street Journal
continuemos a ver a troca de pontos de vistas havida com Domenico Mario Nuti
À publicação da versão inglesa do texto, seguir-se-à a versão em português e, por fim, a versão em italiano.
The Euroarea: Premature, Diminished, Divergent
By D. Mario NUTI, Professor Emeritus, Sapienza University of Rome, dmarionuti@gmail.com, Website http://sites.google.com/site/dmarionuti/Home Blog “Transition”: http://dmarionuti.blogspot.com/.
Part I
1. Expected Benefits and Costs of a Common Currency
The formation of a Common Currency Area is usually expected to generate at least seven gross benefits for its members.
First, a reduction of transaction costs, such as the cumulative cost of converting one currency into another (and then another).
Second, an increase in competition, given the greater transparency and comparability of prices once they are all expressed in a common currency.
Third, a reduction of the rate of inflation, if the management of the common currency is subjected to greater discipline by an independent Central Bank targeting low inflation.
Fourth, the elimination of exchange rate risk in transactions among member countries within the common currency area.
Fifth, a lower interest rate associated with both lower inflation and the elimination of exchange rate risk.
Sixth, in addition to all these factors expected to promote trade integration within the area, the promotion of greater foreign investment, given the investors’ ability to repatriate profits freely in the same currency in which they are earned.
Finally, there are the benefits expected of greater financial integration, which would provide among other things a form of implicit insurance against asymmetric shocks.
Conversely, there are also at least three gross drawbacks to be expected by the members of a Common Currency Area. First, the loss of national monetary policy, potentially serious in case of asymmetric shocks. Second, the loss of the national exchange rate as a policy instrument, especially the loss of currency devaluation as a means to enhance national trade competitiveness. Third, the fiscal discipline involved for national governments by membership of the Area.
On balance, there is an expectation of positive net benefits from the establishment of a Common Currency.
2. Actual Benefits and Costs of the Euroarea
The creation of the Euroarea has resulted in a mixture of actual benefits and drawbacks of different sizes, trends and net balance over time. Savings in transaction costs in currency conversion clearly have been grossly exaggerated, since those costs are incurred only for a possible currency mismatch between monetary revenues and expenditures. Prices can be easily expressed in any currency chosen as numéraire, so that greater transparency is a delusion. Inflation has been tamed successfully by the European Central Bank and brought down below the best earlier performance of the Bundesbank, but by 2013 labour unemployment has reached record levels in the Euroarea. Interest rates have fallen with the introduction of the euro and gradually have converged to roughly a uniform low level maintained for seven and half years until 2010 when the spread between national borrowing rates and the lowest rate paid by a member country (Germany on its long term Bunds) has widened spectacularly, together with the cost of insuring against country default with CDS (Credit Default Swaps). Banking integration within the Euroarea turned into a mechanism of contagion. Asymmetric shocks – a serious concern when the Euro was established – have not been a major problem, but the inability to implement an external devaluation has brought about alternative and costly measures of internal devaluation i.e. deflation of wages and prices. Fiscal discipline in the form of concerted austerity, within the whole Union and not only in the Euroarea, has depressed GDP and employment in the area as a whole and especially in the Southern members states, to a greater extent than the resulting reduction of debt thus raising debt/GDP ratios and widening their divergence (on this point see below).
Since the Greek crisis of 2010 and successive crises in other member countries the possibility has been seriously and widely discussed of the Euro-area splitting into its national components with the restoration of national currencies, or at least splitting into groups such as a Nordic and Southern group with a currency respectively stronger and weaker than the Euro as it is today. (See Cambridge Journal of Economics, Special Issue on Prospects for the Eurozone, Volume 37 Issue 3 May 2013, downloadable free of charge). While initial calls for Euroarea break-up were initially expressed by rightwing circles, recently they were joined by leftwing circles (for a critique see Andrew Watt, Why Left-wing Advocates Of An End To The Single Currency Are Wrong, 10-07-2013).