Sunday, September 22, 2013

National Bank of Poland - Proposed Dismantlement of Eurozone

Controlled dismantlement of the Eurozone: A Proposal for a New European Monetary System and a New Role for the European Central Bank.

The above is a working paper published by the Polish Central Bank. The authors are a former Deputy Finance Minister and the Chief Economist of Commerzbank's subsidiary in Poland. They argue the Eurozone was now threatening the EU, as it is unrealistic to believe that the current austerity policies are likely to work. Defending the Euro at all costs may lead to political collapse, and a disorderly breakup. Their proposed alternative is for the euro to remain the currency of the least competitive countries, with the strong countries to leave first – to be followed by a new system of currency co-ordination.

This working paper was first published in July of this year.


  1. This is bullshit. Why is that? Every country fantasize inviduality althought being in a priveleged geographic position. Poland best competitive advantage are trade tariffs (duty) 4th -because is neighboring to Greece, not to Germany.
    The antilipsis of being in europe is a part inluenced from Russian experiences. They thought themselves as the inland UK and try to have an idependance from Russia maintaining a special partnership with USA. Its rediculous.
    Their economic interests are first. In a controlled dismantlement of eurozone (not of cource unregulated, can't be for sure) if countries like Germany leave euro, Poland will benefited most in terms of being promising for investments from neighboring countries as being the most poor.
    Herr Klaus when you start analysis by suppoting a controlled dismantlement of eurozone, this political view of europe is only economically integrated in pieces.
    Νext to the Ocimum basilicum watered and pot. Its narrow minded.


    1. What do you expect? Greece has no chance to recover inside the Euro. It has neighbour countries that are a lot more attractive to investors. Turkey has the same sand, same water, same historic sites and temples and equivalent food. Where do you think tourists will go to? Greece isn't able to be competitive with Turkey inside the Euro. Same regarding Bulgaria. Greece is one of the mayor subsidy recipient of the EU, but is has nearly all gone into consumption, not into productivity. Do you really expect yet bigger transfers from the north? The Euro project has failed, and each day more money printing is nesessary to keep it up. One day very soon, the inflationary money-bomb will burst.

    2. In the working paper it is described a strategy in a general framework, which analyzes the economic implications of the problem. It is not a matter how a complicated financial issue will resolved, but which is the political approach of leader countries in eu. Who will define which countries to stay and which to leave? France, Spain, Italy will stay? Those 3 are half europe.
      This working paper promote an isolationism, in total accordance with Poland's view of europe.
      The important however the writers let it at the end.
      This is the Transatlantic Trade and Investment Partnership or TransAtlantic Free Trade Agreement TAFTA.
      Poland have great interests for TAFTA especially in contrast with no eu countries but competitive to them.


  2. This proposal is interesting.
    Klaus, you as a experienced expert, why did you not comment it at all?
    For me as an economic layman, the whole mess became visible when Mr. Sinn published in German about the Target2 imbalances. From then on it was clear that the whole system was broken.
    It could either be repaired by sufficient austerity in weak countries or by splitting the Euro zone in stronger and
    weaker parts. With the current political situation in Italy (and France) imho only the splitting alternative is left.

    H. Trickler

    1. It seems that great minds meet... I, too, had become aware of Tartget2 through Prof. Sinn. Around that time, the Bundesbank published its March 2011 report which prompted me to write the paper below. I had sent it to the Bundesbank with the request that they should tell me where I was wrong. And I never heard back from them.

      I had previously expressed my views about where I saw the Eurozone heading in these 2 posts:

      If someone asked me what to do, I would suggest to allow EZ-countries to run parallel-currencies: keep the Euro as it is as the 'foreign currency' and create a new currency as the 'local currency'. When the states run out of 'foreign currency', they can begin to make their domestic payments in the new 'local currency' and an exchange market will develop between the two. Remember, there was a time where we had an ECU and local currencies.