Thursday, 18 June 2015

Grexit, would it really be that bad?

I had the opportunity a couple of years ago to debate Greece's financial problems at the EU Parliament with Green MPs from around Europe. I argued then that having a separate currency afforded some protection, a bit of a firewall, from the turbulence of the economy. For example it allows countries to devalue their currency, ensures sovereign control on monetary policy and it slows the wealth pump that rich countries exert when there are no fiscal or monetary boundaries.

As those troubles worsen with talk of Greece exiting the Eurozone, there seems to be worry about returning to the Drachma. I think that firewall will help Greece in the long term and allow it the freedom to recover by controlling its own monetary policy. It won't help with international flows of money - Greece will still struggle with imports but I guess it must have this problem now.

The Greek people need to regain control of their economy. They have been hit harder than most by the austerity measures demanded by negotiators and now they are demanding more.

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