The article proposes a controlled segmentation of the Economic and Monetary union. Its aim is to reinvigorate the European ideal, rather than reviving the parochial nationalism of the past. The key is to ensure that it arises from the European Union’s economic and political core. Specifically, Germany, Europe’s greatest economic power, and France, the intellectual progenitor of European unification, should announce their simultaneous exit from the euro and re-adoption of the Deutsche Mark and the franc. This would trigger the immediate revaluation of the Deutsche Mark – and possibly of the franc – relative to the euro. For their part, other EU member countries would have to decide whether to retain the euro in its truncated form or revert to their own national currencies, possibly pegging them to the revived Deutsche Mark or franc. Regardless of their decision, the price competitiveness of the eurozone’s weaker economies would improve considerably.
France and Germany would need to implement interim arrangements to safeguard their banking systems’ stability. Moreover, they would have to negotiate with the ECB and other European governments a plan for managing euro-denominated debts. A period of monetary uncertainty, as European economies adjusted to the new environment, would be unavoidable. But that would be far better than the economic and political impasse in which the eurozone is now trapped.
The complete article can be found here.
The article is a joint publication between the following scholars: João Ferreira do Amaral, who was Professor of Economics and Economic Policy at the University of Lisbon and economic adviser to the Portuguese president; Hans-Olaf Henkel, former president of the Federation of German Industries, Honorary Professor of Economics at the University of Mannheim; Peter Oppenheimer who was a fellow at Christ Church, Oxford University; Jean Jacques Rosa is Emeritus Professor of Economics and Finance at Institut d’Etudes Politiques de Paris; Antoni Soy, Professor of Applied Economy at University of Barcelona, who was Deputy Minister of Industry and Enterprise in the government of Catalunya; and Jean-Pierre Vesperini, Professor of Economics at the University of Rouen, who was a member of the French Prime Minister’s Council of Economic Analysis.