currency union

Devaluation might have been an obvious remedy, but can only be achieved by leaving the currency union.

For the true believers, currency union was always just a means to that greater end.

A second lesson is that the benefits to a small country of being part of a big currency union are not all they were once cracked up to be.

And Greece is only a symptom of a wider problem: Does the eurozone make sense as a currency union?

If the answer to the last question is No, then one has to ask whether the currency union will last in its current form.

Yet the point of the currency union was that it was irrevocable.

Many have argued that, within a currency union, current account deficits do not matter any more than between Yorkshire and Lancashire.

Such moves were criticized at the time, but European leaders deemed them acceptable as they sought to begin the long-planned currency union.

In such an economically integrated area as the euro zone, leaving the currency union would not solve Greece's economic problems either.

But if Italy or Spain were to do this, it would effectively break up the currency union.

That opened up in public the possibility that the currency union might not be forever.

Yet all knew that the currency union, with its disparate economies, was far from optimal.

If this is a true currency union, a deposit in any eurozone bank must be the equivalent of a deposit in any other bank.

In a currency union, pay needs to adjust that much more quickly to changing market conditions to shift workers out of high-cost industries.

Germany is in a supposedly irrevocable currency union with some of its principal customers.

Mitterrand's offer was well framed -- Germany would get a currency union largely on its terms, but Kohl would have to compromise on timing.

Any currency union among diverse economies is bound to be a risky venture.

In a currency union, borrowers speculate on a bail-out and do not let exploding public and current account deficits bother them.

When the eurozone was created, a huge literature emerged on whether it was an optimal currency union.

That said, the currency union was hardly an act of martyrdom by Germany.

The answer to this question is illuminating: membership of a currency union makes a country fiscally fragile.

This is where we need to go back to the beginning of the project for a currency union.

These countries have no alternative, within the currency union they chose to join.

EU states meeting the conditions for the introduction of the euro will presumably review their attitude to currency union.

History shows how messy the dissolution of a currency union can be.

But as a currency union, survival depends on shared economic and political values.

But that vote had to do with political symbolism, rather than with the mechanics of currency union.

Eurozone policymakers have long insisted that the balance of payments cannot matter inside a currency union.

Europe's two biggest economies appear to have resolved major differences on how to save the euro currency union.

The architects of the eurozone thought that balance of payments crises were impossible in a currency union.

In fact, some existing members are struggling with the rigours of a currency union.

Keynes did so, but typically turned a challenge into an opportunity, proposing an international currency union.

In a currency union, with devaluation ruled out, there are only two ways of reducing unit labour costs relative to those of other members.

So countries that do a lot of business with one another may have a lot to gain from a currency union.

In other words, Britain is suffering from the very "asymmetric shock" that is so hard to adjust to within a currency union.

Tokyo has quietly dropped talk of aiming for a currency union.

Could there be a negotiated withdrawal from the currency union?

The second option: Do nothing, preserve his principles, and risk watching the currency union fall apart.

A currency union is as strong as its weakest link, which in the eurozone's case is Greece.

So yes, the Germans have it right: Europe's currency union does indeed involve transfers.

A currency union with structural mercantilists in the core now threatens a permanent slump in the periphery.

But a currency union whose core country not only exports deflation, but also stands aside as members collapse is in deep trouble.

Greece's struggles threaten the first real fractures in the European currency union since its inception in 1999.

The truth is that Germany derives myriad benefits from the currency union.

It could also cite a precedent for leaving a currency union without undue dislocation: Ireland (1979) and Slovakia (1993).

These are features that help smooth a currency union in the US, but that do not yet exist in Europe.

'What if you buy the euro and the Germans vote with their feet and leave' the currency union?

This is a slow process within a currency union.

On the other hand, as Friedman pointed out, forming a currency union means sacrificing flexibility.

Like bad fairies around the crib of a princess, the euro's founders blessed a currency union that contained the seeds of its own doom;

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