In fact, the existence of the euro has, until now, been a bulwark against disaster. Suppose it had not been created and that the financial crisis in 2008 had broken over a Europe with multiple floating exchange rates and no European central bank – the eurosceptic utopia. The Irish, Portuguese, Greek, Spanish, Italian and French banking systems would have stood alone and they would have collapsed in a domino effect, interacting with the mega-crisis in Britain and the US. Even some German banks would not have been immune. There would have been a 1930s-scale slump, the break up of the EU and a rise in beggar-my-neighbour devaluations and trade protection.
Err, no Willy, no.
Leave aside, if you like, that if the euro hadn\’t happened we wouldn\’t have had the Irish and Spanish property booms, the Greek drunken sailor impersonation with the borrowed money. Just forget that we wouldn\’t be in this situation at all.
So, what would have happened if we had had all that without the ECB, with all those independent central banks and currencies? Well, each central bank could print as much money as they needed to backstop their banks and there wouldn\’t be a crisis would there? A lot of inflation, yes, but not this crisis.
You know, everyone could have done what the US and the UK have done: printed their own currency because they still had their own central bank.
I don\’t say it would have been pretty or even enjoyable but it would have been vastly better than what we\’re about to get.