With A Complementary Currency, Greece Can Devalue – And Remain In The Euro Area

kristy Reforming Global Finance

The European project is at risk. The current PIIGS (Portugal, Ireland, Italy, Greece, Spain) Dilemma
shows that Europe’s monetary union was built with a structural flaw. When introducing the Euro, the
joining nations threw important economic adjustment screws over board – the possibility to adjust
their currencies’ exchange rates and monetary tools to support underperforming nations – without
any monetary substitutes.

The standard recipes and their negative effects

As a result, all underperforming nations have become dependent on compensations, loans, debt
restructuring, haircuts and other exogenous goodwill policy options “kindly” offered to them by their
stronger neighbors. Alternatively, they are forced to undertake extensive fiscal cuts at great social
and political costs, although it is not at all evidenced that these cuts really contribute to long?term
recovery. Indeed, quite the opposite is likely to occur.

Click here to read “The Euro Flaw”