In rough waters, monetary sovereignty is lifesaver

Hardly had we got out of the crisis that it started anew. This sentence could be what’s happening now with financial markets threatened by rising geopolitical and terrorist tensions, the slowdown in China’s economic growth and ongoing low oil prices. However there could be something that’s proved to be the most effective lifesaver in rough waters. If one compares advanced economies, one detects greater – and growing – disparity while assessing criteria like economic growth, trade balance, unemployment rate.

In Europe for instance, such a difference has widened endlessly since 2008 between France, the UK and Germany. Although Germany has a total population around 15 million people larger, at constant scope, one noticed it has less difference according to the criteria mentioned above with the UK than with France. Yet France is, like Germany, a Eurozone country with roughly similar skills in the services, industrial and/or technological fields. Both Germany and the UK currently enjoy low unemployment rate, higher than average economic growth and better trade balance than France. Of course, France might have not led the needed reforms to achieve similar results, however this can’t explain everything.

Indeed, what’s the main common point between Germany and the UK is monetary sovereignty. The UK still has the pound and will never give it up, the same way as the US will do everything to defend the dollar. Germany belongs to the Eurozone but facts – like how the risk of “Grexit” was addressed months ago – provided evidence that in the end, the euro is somehow a Deutsche Mark-bis rather than a Franc-bis. Is seems Germany will support the euro as long as it serves its economic interests first, and Europe as a whole second. Germany needs Europe and chiefly France as healthy economic partners.

After all, the Euro is quite a brilliant idea except that it has not brought prosperity for all but Germany. In that context, either the euro becomes a truly European currency or it will disappear. Most of the ECB materials, particularly speeches, for the sake of the anecdote, are made/available in German and English. French barely exists, and that’s the heart of the matter.