The Euro was a good first step...

Former Member

I feel that British membership of EMU is not prudent in the short term.

In my mind, any arguments on EMU participation should be based on economic/political grounds. As far as economics goes, I cannot see the logic in joining.

Britain would only seek to lose its sovereignty if it ever joined the single currency. Why do we not have the right to determine our own monetary policy (and who know, in the future) fiscal policy? A single, universal monetary policy set by the ECB in Frankfurt surely cannot be beneficial to every member state. Different nations experience differing economic circumstances.

Former Member

Originally posted by onenatcons
A single, universal monetary policy set by the ECB in Frankfurt surely cannot be beneficial to every member state. Different nations experience differing economic circumstances.

An intersesting statement that seems to imply that ECB monetary policy should give each member state the same level of utility. But let's apply this as an analogy to our neighbours across the Atlantic.

Put simply, as you'll know, the Fed sets the T-Bill rate for the Union. Surely you wouldn't argue that the Federal Reserve Bank's monetary policy is equally beneficial to each of the 50 states? However, this does not prevent the individual states from prospering (to a greater or lesser degree) given their unique economies, fiscal policies and politics.

So where does this myth, that ECB monetary policy must benefit each EMU member state equally, come from ?

And besides, the member states knew what they were signing up to.

Former Member

Originally posted by Squinty


An intersesting statement that seems to imply that ECB monetary policy should give each member state the same level of utility. But let's apply this as an analogy to our neighbours across the Atlantic.

Put simply, as you'll know, the Fed sets the T-Bill rate for the Union. Surely you wouldn't argue that the Federal Reserve Bank's monetary policy is equally beneficial to each of the 50 states? However, this does not prevent the individual states from prospering (to a greater or lesser degree) given their unique economies, fiscal policies and politics.

So where does this myth, that ECB monetary policy must benefit each EMU member state equally, come from ?

And besides, the member states knew what they were signing up to.

Why shouldn't it benefit each state equally?

One must ask WHY a nation should join EMU? If it is to experience greater economic benefits, then losing control of one's monetary policy would only hinder such actions.

The states of the US (bar Texas) have never been nation-states and therefore do not have any past experience of economic sovereignty.

I feel it's complete folly to join a system in which there is no guarantee of economic stability.

Former Member

Not entering into the discussion of to join/ not join - I've not yet seen all of the arguments laid out ad besides I hink that politics will win the day either way it goes not economic argument.

Yes, all member states should be able to benefit equally from the ECB monetary policy however each state makes other macro-economic policy choices that affect their economies. BUT, it would be wrong to suggest that that the ECB does not seek to apply interest rates equitably across the euro-zone.

Furthermore, interest rates are only one instrument (albeit a powerful one) for modulating growth in the economy. It is faulty argument to suggest that the existence of a single currency would not allow EMU nations to grow and prosper.

Just curious about what 'nation-hood' has to do with anything?

The States in the US do behave as economically autonomous bodies lending, borrowing and spending money in much the same way you or I do, being subject to external constraints such as taxation, interest rates and the fluctuations of the global economy. Hardly what I would call 'stability'!

So anyway back to the original question: Where does the myth come from that all EMU nations should receive equal benefit from an ECB rate change (at any one given point in time)? Seems to be a corner-stone of many anti-EMU arguments.:cool:

Former Member

If there is no 'equal benefit' then what is the point of joining?

Why should one country's economy suffer when another nation's might prosper?