With the European elections looming, it flares up the debate on what should be the future of the single currency. According to the Nomisma study centre, the currency union project has proved to be partly unsuccessful, but the eventual return to national currencies - a proposal that is enjoying success on several fronts - would bring even worse damage than that suffered so far by the economies of the Eurozone.
“The euro hasn't worked well, it has generated more divergence than convergence in its 15 years of life, leading with the crisis to excessive penalties for peripheral countries – reads the analysis by Sergio De Nardis, chief economist of Nomisma, published in the May issue of the newsletter –. The delay with which the ECB was allowed to eradicate financial panic through the OMTs meant that the latter guided the economic policy choices of the countries under attack for a long time, with recessionary effects that could be limited. But being aware of it does not lead to proposals to abandon the euro, which would cause much worse damage”.
Nomisma analysts believe that traumatic ruptures would have political and economic consequences that could lead - with the closure of the markets - to an economic-financial isolation of Italy, to the opening of legal disputes with creditors, to the consequent uncertainty about the balance sheet values and the erosion of household savings by inflation.
There are political, economic and technical barriers to exit, which however - according to Nomisma - are not valid in all circumstances. “If the option of staying in the euro were to become too onerous due to the persistence of mass unemployment and the extension of the phenomena of impoverishment - continues De Nardis -, then majorities of citizens could form whose interests are more affected and who consider the costs bearable of an exit. Therefore, the height of exit barriers cannot be relied upon to keep the political and economic framework unchanged”.
The analysts of the study center also underline the need to exploit all the spaces available to strengthen the European architecture: the first steps in this direction can be observed, for example, in the slow emergence of a banking union, but it still remains the responsibility of politics - under the drive primarily of countries that have a common interest such as Italy, France and Spain - speed up the pace, thus expanding the scope of changes in two directions, i.e. redefining the adjustment path of the Fiscal Compact and making the intra-competitive rebalancing more symmetrical -European.
Attachments: The complete text of the analysis.
