MUNDELL: EURO WILL FORCE BUDGETARY DISCIPLINE, INCLUDING
Robert Mundell, Columbia University economist and Nobel laureate,
is considered the "theoretical" father of the euro. He spoke
to European Viewpoint editor Nathan Gardels.
EV: Has the Euro launch been successful
ROBERT MUNDELL: Yes, the launch has been successful. The new currency
was greeted with enthusiasm rather than alarm, and it is creating a new
element of shared experience for Europeans. Even before the paper currency
was introduced, speculation against the individual national currencies
had been eliminated, and confidence in the established exchange rates
was confirmed by the fall in interest rates in all countries except the
EV: What will be its main impact over the next decade?
MUNDELL: It will foster further European integration in fields
of trade, finance and money, and it will lower transaction costs and increase
transparency for all exchanges. At the same time, Europeans will have
at their disposal a world-class currency second only to the dollar, and
in the long run it is possible that the euro will challenge the historic
supremacy of the U.S. currency.
EV: What are your worries, particularly since the Italian government
seems to be lukewarm?
MUNDELL: My worries are that European governments will take advantage
of the benefits conferred by the euro, including lower interest rates
that reduce interest payments on the public debt and lower budget deficits,
and rest on their laurels. Instead, they should work to improve the economic
situation and health of each economy by deregulating the labor market,
fostering competition and denationalizing state enterprises.
Italian doubts about the euro may partly reflect the belief that it will
force budgetary discipline and deregulation measures against the interests
of labor. However, I believe that this new discipline would have had to
come in Italy, even in the absence of the euro. In this respect the euro
represents a wake-up call. Italy does not want to become another Argentina!
(c) 2002, European Viewpoint. Distributed by Los Angeles Times Syndicate
International, a division of Tribune Media Services
For immediate release (Distributed 1/9/02)
back to index