Tom Keene Talks to Charles Wyplosz

Tom talks with Charles Wyplosz, director of the Geneva-based International Center for Monetary and Banking Studies, about the euro, defaults, and austerity

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By Tom Keene

March 2, 2012 at 1:15 AM UTC

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This article is part of the March 5, 2012 issue of businessweek.

Paul Krugman just wrote that the creation of the euro effectively reinvented the defects of the gold standard, which played a major role in causing the Great Depression.
I’m sorry, but I totally disagree with that statement. The monetary union isn’t perfect. They didn’t get it completely right the first time, but they got it 95 percent right. Policymakers are making very human mistakes, but that doesn’t mean the whole thing was doomed in the first place.

Is Europe going to get itself out of this problem?
Sure. I expect the arrangements with Greece are not going to work any better than the previous one. I think Greece will default. But I don’t think Greece will leave the euro. Meanwhile policymakers are very slowly moving in the right direction.