Graham comments on ECB president Draghi's article, 'The future of the euro: stability through change', published in Die Zeit.
Draghi writes in Die Zeit
ECB President Mario Draghi would make an excellent finance minister of the euro area – and that job will probably be available within a few years, but not in the sense of a conventional equivalent to the US Treasury Secretary as there will NOT be a United States of Europe. That is indeed setting “the bar too high”.
He stopped short of the analogy with the gold standard in its heyday but that is what the euro should be. Euro Governments cannot print `gold’ so they must live within their means but the single market (free movement of people, goods, services and capital) means there are spill-over effects onto the neighbours so I agree with him that “Where necessary, sovereignty in selected economic policy fields can and should be pooled and democratic legitimation deepened.” The core of the debate is now about what is `necessary’, and we have already gone a very long way – much further than most investors realise. (I will elaborate/explain this in my September book)
“When markets are fragmented or influenced by irrational fears, our monetary policy signals do not reach citizens evenly across the euro area. We have to fix such blockages to ensure a single monetary policy..” This is the key policy phrase and I have highlighted the operational code words! I do not see that large scale bond purchases will do that – and they will have other political and economic effects! So I argue even more strongly that '#bishopbills' (more details) are what is needed. The book will explain how they can readily evolve in the foundation of a European Treasury – hence the eventual need for someone fulfilling the role of Secretary of such a body…
More blogs
© Graham Bishop
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article