Introducing ´The Blue´ into the EU´s economy

So we all feel the results of the recent economic recession in Europe, caused partly by the failure of governance in some particular countries…but what should we do about it? The idea I was discussing with people was: what if we created a second currency to accompany the Euro, and what would the economic implications of this be?

The idea is is that we have the Euro which we want to keep strong, and a second currency, which we´ll call “Blue”, to accompany the Euro. Blues will be weaker than the Euro in order to make exports attractive to other countries, and the Euro will stay strong in order to keep buying power. In theory, this could help the situation present in some EU countries who are experiencing economic problems. My question is, what will be the implication of the Blue on a world wide scale? And is this even feasible? Any economists out there who want to comment?

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2 Responses to Introducing ´The Blue´ into the EU´s economy

  1. Matt says:

    Interesting concept. The theory behind it somehow makes sense; however it might be pretty hard to implement a second currency.
    It sounds a bit unfair to let only one monetary system enjoy the benefits of a second weaker currency. If this occurs in Europe, we can predict that other countries will follow and will also create their own ‘blue’ currency in order to keep exports affordable.
    Stiff competition for exports reappears and a european advantage on exports will be dissipated.
    At the moment, the Euro is weak. Therefore the amount of exports is not the main issue for Europe.

    One of the main problems at the moment for the Euro is that countries of the Eurozone are not unified enough. You mentioned it in your text, there is a failure of governance. This is a crucial obstacle why it is hard to get out of this downward spiral. According to a recent article from The Wall Street Journal, there is a lack of necessary actions that comes from an inefficient EU system, and it causes the downward spiral to continue.

    Your theory could be promising. Nevertheless I believe Europe should focus on taking coordinated and effective actions that can save the Euro and some of the countries of the Eurozone. The current system needs to be ameliorated and sustainable before a ‘blue’ currency can be created. In order to do that, the implementation of a brilliant governance throughout the entire Eurozone is paramount and should be achieved asap. Once this is done and sustainable, a blue currency could perhaps kick in 😉

    Do you have any ideas how to found a sustainable European governance?

  2. iemkepostma says:

    So we agree that the problem is governance within the EU. A solution that could be implemented would be to create an inner and outer circle within the EU.

    The inner circle would consist of those countries who pass the sustainable governance criteria, and the outer circle would consist of those countries wanting to join the EU, yet are not able to meet the governance standards demanded. This would also enable the EU to recruit countries which are weak on some of the criteria, yet give them a chance to reform themselves. This could both expand the Euro-zone and promote sustainable and efficient governance at the same time.

    The inner circle would then be able to create a strong Euro, whilst the outer circle could be using Blue as a runner up to the Euro, until it gets its governance sorted. This function of Blue differs from what was previously stated, yet it could still be a possibility to trade with Blue within the EU. Again, I am not sure of the economic implications of a 2 currency system.

    EU standards should become higher, and should not tolerate corruption within its economic and governance system. Countries that violate this should be made an example of by removing ‘inner circle’ status, until standards have been met.

    Is this viable?

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