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It has coexisted first with the Bretton-Woods gold standard and then with the European Exchange Rate Mechanism. Both systems were punctuated by devaluation crises, as they couldn't fail to be. The Euro is an attempt to eliminate the possibility of a devaluation without moderating the macroeconomic imbalances that lead to devaluations.

EU countries outside the Euro are still committed to stable eschange rates and a structure similar to the old ERM. It has failed, too, as Hungary and some of the Baltics have experienced devaluation crises and/or depressions. The economy of Croatia, an accession country, is breaking under the weight of the Euro exchange rate peg without access to EU markets as it remains outside the EEA but has implemented free movement of capitals and opened its market to an extent.

It's a disaster.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 11:42:52 AM EST
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