LETTER:When to join a single currency

Share
Related Topics
From Mr Julian Malins, QC

Sir: David Marsh's article ("Britain must join the game", 9 June) was timely but too sanguine. There is only one problem in moving to a single currency in the European Union and that is the fixing of the redemption rates. All the other "problems" (which are the only ones being debated) are in fact the consequences of getting the redemption rates wrong.

There are two ways of fixing the redemption rates - the slow and the fast. The slow method is the Exchange Rate Mechanism of the European Monetary System, which, in the case of sterling, failed. The fast method is simply to replace national currencies overnight with a new currency, which is legal tender in all the jurisdictions, at redemption rates agreed between the existing central banks and the new European Union Bank.

While Britain has fallen out of the slow method, Germany, France and the Benelux countries are discussing whether to go for the first method, just for themselves. This is practicable if Germany, as happened with the D Mark and Ost Mark on re-unification, agrees redemption rates obviously favourable to the others and bears the immediate costs in return for the long-term benefits.

If this occurs - and it is probable, not merely possible - God help the other member states. The world will want reserves in the new currency and not, for example, in sterling. The pound will collapse and interest rates take off. The damage to our economy - to say nothing of the loss of most of the City's business to Frankfurt - would be staggering. The price thereafter of coming into the new currency will be exorbitant.

Whatever the short term political difficulties with some of its backbenchers, HMG must ensure that if a few member states take the fast route to a single currency, we are one of the few.

Yours faithfully,

JULIAN MALINS

Brick Court Chambers

London, WC2

9 June

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Metail Ltd: Business Development Manager for Asia Pacific

£35,000 - £40,000 based on experience : Metail Ltd: As a Business Development ...

Guru Careers: Product Manager / Product Owner

£30 - 40k (DOE) + Bonus & Benefits: Guru Careers: A Product Manager / Product ...

Recruitment Genius: Car Sales Executive - £17,000 Basic, OTE Uncapped

£17000 - £27000 per annum: Recruitment Genius: The Company are looking for a S...

Recruitment Genius: 1st / 2nd Line Technical Analyst

£16000 - £18000 per annum: Recruitment Genius: A 1st / 2nd Line Technical Anal...

Day In a Page

Read Next
All a-flutter: Marbled White Butterfly (Melanargia galathea) resting on a flower  

Lepidopterists rejoice – our finest butterfly month is almost here

Michael McCarthy
The memorial to the 7/7 bombing victims  

After the London bombings on July 7 I was dubbed a 'British Muslim' for the first time - suddenly my religious identity took centre stage

Sabbiyah Pervez
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate