Monday 23 October 2006


One of Natalie's correspondents, JEM by name, writes rather sensibly about the Euro:

The euro may have been assembled in a flawed way — I agree — but that is not to say that the idea of a common currency is of itself wrong in principle.

After all, if it's better for each country in Europe to have its own currency, how much better it would be if each county in the United Kingdom had its own currency too... or each town... or each street... or each house... After all, why should the Central Bank of 25 Typical Street hand over control of the 25 Typical Street Groat to the Central Bank of Typical Street and their Typical Street Groat?

... After all, what is money? A national totem? No, it's just a medium of exchange: a tool.

Damn straight.

So here's my cunning Euro policy what I would enact was I in charge.

I would legalise the use of the Euro in the UK but I would maintain the pound. I'd stick a cap on what banks could charge their customers for switching between the two currencies and allowing them to deal in both with minimum effort, and perhaps a cap on the maximum time they could keep money in limbo between currencies when a customer asks them to change it. (In an ideal market, that wouldn't be necessary, but British banks act as a cartel whenever they get half a chance. Unfortunately, they need the occasional legislative kick.) I'd require British businesses to accept either currency — though they'd be allowed to offer incentives if they wanted — 10% off if you pay in Euros; that sort of thing. And that's it.

Those people who hate the Euro wouldn't have to use it. Those who love the Euro could use it as much as they liked. The rest of us — which I reckon would quickly become most of us — could just use whichever was the most sensible at the time. We'd get lots of the economic advantages of having the Euro, with few of the disadvantages (I reckon — I'm not an economist). The public would generate money out of nothing as they'd start to watch interest rates closely and switch currencies whenever profitable. And everyone in the country would get much much better at mental arithmetic. Lord knows the schools aren't teaching it to them.

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