Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-11-18-Speech-2-422"
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"en.20081118.33.2-422"2
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"Mr President, Commissioner, ladies and gentlemen, when I read up on the subject that we are now debating, the balance of payments problem, I felt like Marcel Proust with his madeleine cake
. There is an aroma of the 1950s and 1960s about the approach to the problem.
The balance of payments problem? This is something that we are to set aside EUR 25 billion for. Why on earth should we do this? Is this what we are doing today? This is intended for those countries, those poor countries, as I understand it, that are in the EU but not in the currency union and that may then need to be rescued from a fate worse than death: the balance of payments problem. This has, in that case, been created by the European Union itself, of course. What we are talking about here no longer exists in fact.
My own country, Sweden, is part of the EU and loyally supports it, implementing everything that is decided there much better than most other countries, but we have not joined the monetary union. Wisely so, in my opinion. However, if we should now experience problems in Sweden, will we then have a balance of payments problem? The answer is, of course, no. Naturally, it is possible to imagine that Sweden could start to mismanage its economy and experience a much higher rate of inflation and increase in wages than other countries. What happens then? Do we get a balance of payments problem? No, the Swedish krona falls to compensate for this. Nothing else happens at all. This is also the case in other countries in the same situation, for example in the United Kingdom.
What is the problem then? Well, the problem is that, if these countries are members of the European Union – which they should be – but are not members of the monetary union – which they should not be – then they are to be forced, as you intend, to keep a fixed exchange rate with the euro. The worst-case scenario is to be forced to keep a fixed exchange rate with your most important trading partners. It is clear that if a country mismanages its economy, experiences a higher inflation rate or suffers a structural setback in its most important export industry, its exports will decline and its imports increase. Suddenly the question is, how is this to be financed?
This is, however, a totally artificial situation. It is thoroughly old fashioned for countries that are not members of the monetary union to choose to fix their exchange rate and then need to be rescued by the International Monetary Fund or the EU or by anyone else. Why, for goodness sake, should this happen? It is a form of economic policy that is completely out of date. Either a country joins a monetary union – that could be right sometimes, I agree – or it remains outside, standing on its own two feet with its own independent monetary policy, and takes care of itself. If the country takes care of itself, nothing in particular will happen. If it mismanages itself, the currency will fall to compensate for that. This is not particularly dangerous, either.
I would therefore like to point out that, while we are discussing whether we should set aside EUR 25 billion for this purpose, it is a purpose that is actually not at all necessary. It is a problem that we have created ourselves, or rather
have created yourselves. Put an end to it. Those countries that are members of the EU but have not joined the monetary union should maintain a regime with a floating exchange rate. Then the problem disappears."@en1
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