Letter: Price of the euro

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The Independent Culture
Sir: Once again, your letters column has been invaded (25 September) by those seeking to spread misinformation about monetary union.

Bill Rammell MP's assertion that our being an "out" was partly to blame for the European Central Bank's decision to ban national symbols on euro notes is at odds with the ECB's own statutes, which forbid a member state exerting political pressure on the members of the ECB board. He also displays touching naivety in his confidence that Mr Blair will be able to reverse this decision.

John Parkin diverts attention from the true nature of EMU by talking about speculation. Of course EMU cannot be attacked by speculators. The point is that the economic forces that give rise to currency movements, and to speculative attacks, cannot be banished by a signature on a treaty. The economies of Europe behave differently from one another. Some other means will be found to take the strain: some mixture of inflation, unemployment and real wage cuts - unless large fiscal transfers are introduced to cushion the effects.

Of course even the US did not have a single currency for some decades after its creation. And the US has a federal government spending $1.6 trillion a year, one of its functions being the fiscal transfers needed to make its monetary union work. The same would be needed in Europe.


Enfield, Middlesex