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Why the Current Euro System is Flawed and How it hould be Corrected

Updated on May 29, 2013

I believe that the euro as a transnational currency replacing national currences, and hence national monetary policies is fundamentally flawed. The euro system at its current state is highly inflexible, and it is not suitable for many countries with fundamentally different economic, social and historical backgrounds.

For instance most of the least developed southern states of, say Slovakia, Slovenia, Greece, Portugal, Spain, needs extensive investment in its infrastructure, for example, highway, and high speed railway system. Also these countries are younger in terms of democracy and capitalism counties, thus they had less time for the accumulation of wealth, than, for example in Britain. As such these countries should be allowed higher budget deficits for a relatively longer period of time.

I believe a dual currency type of system should be implemented, not only in Europe, but also worldwide. Worldwide, SDR (Special Drawing Rights) should be reformed to be more of a global currency as part of a dual national currency system for all the countries of the world.

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In this dual currency system each country should keep its national currency and thus in own monetary policies tailored to the current and specific needs of the country. The euro should also be accepted as an official currency, in conjuction to the country’s original currency. In this dual system the euro should be accepted for international trade, tourism, etc. Individual businesses, organisations, etc should decided on a one-on-one basis about the use of the national currency or the euro as the basis of their business. In other words this trans-national currency should be used from the bottom-up, not from top-down; it shouldn't be a de facto official currency. This transnational currency's exchange rate, etc should be continued to be determined centrally.


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