The Future of the Euro

A question that needs to be assessed is whether the Euro currency, which is approximately ten years old, is sustainable.

Futurist conference keynote speaker and author Patrick Dixon shared his view on the future of the Euro at London Stock Exchange UK Trade and Investment - Nordic Business Awards. He asks a fundamental question. Why is it that Greece and Ireland are experiencing severe economic difficulties?

Although there have been many broader issues that have impacted these countries that relate to the global downturn, there is a fundamental truth that needs to be addressed. All these countries that are within the Eurozone, by definition have the same currency, interest rates, and cost of borrowing. The cost of borrowing is set by the European Central bank. The fundamental lever that drive most national economies in terms of driving down demand during periods of inflation, or pumping up demand during a period of recession, has disappeared because it is impossible for an individual country within the Eurozone to increase or decrease its interest rates. When there are needs that are specific to a country that require adjustment using traditional central bank mechanisms, there is very little that can be performed by an individual country, as the needs of that specific country may be very different to other countries within the Eurozone. Consequently, it will always be a victim of the policy that is set by the European Central bank. This represents a huge challenge.

In an attempt to achieve a deeper understanding of the issues that impact the Euro, the following topics need to be addressed:

• European Union trends
• Euro crisis in Greece
• Monetary union constraints in high inflation or deflation
• Role of European Central Bank in balancing needs of high growth and low growth economies
• Contrasts between Ireland, Greece, Portugal, Spain, Germany, France, Italy and countries which more recently joined
• Loss of sovereignty to Brussels
• Political issues in controlling budget deficits or imposing budget cuts on an unwilling nation
• Political unrest and threat of strikes or instability
• Challenges for the future