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THE EURO - Media Comments and Reaction News & Commentary in German |
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Reviews in English Euro truths By David Lascelles - published in the March 2009 edition of Financial World The first quarter of this year has seen a sudden emption of speculation about the future of the euro. Will the stresses of the credit crunch prove too much for it, or is this the moment when the single currency will finally demolish the sceptics? David Marsh addresses this question, but not until the very end of this very entertaining book. So I will keep you waiting too. The literature on the euro is growing: recently we had Otmar Issing's insider view as chief economist of the European Central Bank, authoritative but not boatrocking. Marsh is a different proposition. A Financial Times journalist who turned investment banker, and author of several books on European finance, he is free to be much more forthright. This account takes us right back to the beginning, to Charlemagne and beyond to show that monetary union has always been a potent symbol of territory and authority. And so it is in Eulrope. Monetary union is not a recent part of the European dream: it was contemplated very soon after the second world war, and the early attempts to achieve it go back more than 30 years. Although the motivation was ostensibly economic - to get rid of currency volatility - the underlying purpose was always political - to create the ultimate emblem of European unity. Over that time we had a stream of experiments and ideas: snakes, ecus, secret shadow agreements, and so on. None of them worked. The problem was trying to cram a large and disciplined currency such as the D-Mark alongside troublemakers such as the franc, the lira and sterling. The potential for political conflict was enormous - and Marsh describes the intergovernmental wrangling in great style, including some incidents never before reported. The French come out looking particularly devious: out to topple German monetary dominance and humiliate the British, while manipulating the franc every which way. Europe only got its act together in 1989 when Jacques Delors, the European Commission president, produced a report to show how it could be done. This laid the groundwork for the 1991 Maastricht Treaty, which set monetary union as an objective. Again, although the purpose was economic, the run-up to the launch and the management of the euro thereafter were largely political: to garner as many members as possible, and keep them there even if it meant bending the rules. It is a miracle, in a way, that the euro has achieved any stability at all with so much going on behind the scenes. But that may be a tribute to the European Central Bank. So what of its prospects? Marsh has a sceptical streak in him. He recognises the euro's achievements: the fact that it exists at all, that it binds countries together and eliminates currency risk, that it has led to the creation of much simplified and liquid markets, and so on. But there is a hollowness to his words, as if he is merely mouthing Brussels-speak. His tougher analysis is of the euro's potential difficulties: the fact that its shelter discourages economic reform, that one-size-fits-all monetary policy creates distortions, that at the end of the day the eurozone remains dominated by Germany, ("the DM is still alive," he says), and the rest have to lump it. But whether this will lead to a break-up is very uncertain. Marsh suggests that any weak country that leaves would end up financially devastated, but he raises the intriguing possibility that a strong country (Germany?) may leave to escape the drag of weaker members. So bets are still open. Marsh concludes with another point that rings very true: that the UK will not join the euro in the foreseeable future. Britain is by nature too eurosceptic and too attached to its monetary freedoms. Also, it has done very well outside the euro: the economy has grown faster than the eurozone, and London has scooped up all the financial centre prizes. And, for once, the prospect of Britain staying out is not coloured by the continental sniping that has become so predictable and boring. Marsh has culled thoughtful observations from eurozone officials that may reflect a more mature phase of monetary union, where membership of the euro is not a matter of religion. He quotes Peer Steinbrück, the German finance minister: "I don't believe the UK will be in EMU in 10 years. Britain's self-awareness, its identity and its self-definition are not really those of a country that believes it is part of Europe." For further details including book purchases, bulk copies and news on book launch events, please contact: Wiebke Räber, London and Oxford Group, + 44 (0)20 7796 9911, wiebke.raeber@londonandoxford.com For all other questions about the book, including reviews, please contact: For English edition: Katie Harris, Yale University Press, + 44 (0)20 7079 4900, katie.harris@yaleup.co.uk For German edition: Dagmar Landgrebe, Murmann Verlag, +49 (0)40 3980 8313, landgrebe@murmann-verlag.de
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