No, Italy Isn’t a Victim of the Euro
The common currency’s proponents have a strong case; they just need to make it more convincingly.
His turn to try.
Photographer: Bloomberg/BloombergItalian President Sergio Mattarella scuppered two populist parties’ attempt to form a government because they insisted on a euro hater as economy minister. As Italy gears up for a new election in the fall, it might be worth remembering why the euro is actually good for its member states.
Paolo Savona, the octogenarian economist Mattarella didn’t want in the cabinet because of his belief in making non-public contingency plans for leaving the common currency, has described the euro as a “German cage.” That attitude is widely shared; the idea is that the common currency has deprived Europe’s economically weaker countries of devaluation as an instrument of economic policy, forcing them instead to use what is essentially Germany’s currency. The euro, according to this logic, has allowed Germany to issue cheap loans to the weaker economies so they could buy more German goods; Germany benefited while its euro area neighbors ran up debts and suffered the consequences of losing monetary sovereignty.