The most likely scenario is that EMU (Economic and Monetary Union of the European Union) will occur but will neither end Europe’s currency troubles nor solve its prosperity problems.
The most serious criticism of EMU is that by abandoning exchange rate adjustments it transfers to the labor market the task of adjusting for competitiveness and relative prices... losses in output and employment (and pressure on the European central bank to inflate) will predominate.
If there was ever a bad idea, EMU it is.
Instead of increasing intra-European harmony and global peace, the shift to EMU and the political integration that would follow it would be more likely to lead to increased conflicts within Europe.
A critical feature of the EU(European Union) in general and EMU in particular is that there is no legitimate way for a member to withdraw... The American experience with the secession of the South may contain some lessons about the danger of a treaty or constitution that has no exits.
EMU wasn't designed to make everyone happy. It was designed to keep Germany happy - to provide the kind of stern anti-inflationary discipline that everyone knew Germany had always wanted and would always want in future.
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