Monday, March 8, 2010

And now for some GOOD news on the Euro...

Despite the current trouble, George Melloan cheers the success of the Euro currency.

Being Greek, the Athens demonstrators aren't likely to calm down. But everyone else should. The euro bloc is not threatened with collapse. Its members know that the creation of a single currency in 1999 was a truly historic achievement, perhaps the greatest of the 20th century. The euro now serves 329 million Europeans who in recent memory were organized into warring tribes. It has fulfilled the expectations of Nobel laureate economist and euro designer Robert Mundell, who said in 1999 that it would give Europe a world-class currency, second in importance only to the dollar.

It's hard today to imagine the Europe of 20 years ago. Drive in a straight line in any direction from Brussels and in less than an hour you were over someone's border. If you needed gas or wanted food you had to exchange your Belgian francs for French francs, German marks, or Dutch guilders, paying a commission to a money changer. Exchange rates were in constant flux, which meant that traders had to hedge exchange risks at a cost that also was passed on to consumers. And competition across borders, which was the point of the Common Market from its infancy, was inhibited by the fact that there was no single standard of value.

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