Finance Corner By Chris Dickin MSc
About the author Chris Dickin MSc Chris Dickin is an independent cost reduction consultant and financial trainer, working for major companies throughout Europe, Africa, the Middle and Far East. He first trained as a Management Accountant with the Rolls-Royce Limited aerospace division in the UK. During that time, he qualified academically as a professional Accountant and he gained a Master’s degree in Financial Control. Over the next fifteen-year period, he gained a wide experience of UK Industry and Commerce, holding positions as an Accountant through to Financial Director in the finance function of several major UK companies. In 1970 Chris joined the University of Derby as a Finance lecturer. A 23 year academic career saw him progress to become the Assistant Dean responsible for resources in the Derbyshire Business School overseeing Degree and Professional courses.
What is the Real Problem with the Euro? That’s a question that I’ve been asked quite a lot recently! My answer tends to be along the lines of: “How much time have you got to listen while I tell you?” - but anyway - here is an attempt at a summary version: The Federal Reserve Board in the USA, the Bank of England in the UK, the Bank of Japan (and others) are all eventually responsible to their national electorates. There is a direct link between the nation state and its currency.
The link between nation and currency is almost impossible to sustain.
This position does not apply to the European Monetary Union (EMU), - there is no one nation state to take responsibility for the Euro. Instead, there is an ever changing collection of politicians all with a variety of personal and political agendas who at one time have all promised to stick together. In reality, they often wish to see different outcomes to a particular set of circumstances or events. As a result, the link between nation and currency is almost impossible to sustain. Given that basic flaw in the structure, what are the possible remedies? • Full political union, aligning the state and the currency - some conspiracy theorists claim that this has always been the agenda but historically, currencies have usually been created by countries and not vice-versa. It looks to me to be increasingly unlikely. • Germany agrees to let the Euro value fall in line with the economies of weaker EMU members - some conspiracy theorists claim that this has always been the agenda but historically, currencies have usually been created by countries and not vice-versa. It looks to me to be increasingly unlikely. • Break-up of the EMU in the near future - Events in Greece have shown that people faced with deflationary pressures and growing unemployment force their politicians to react to the wishes of their own electors. This has tended to create political vacuums which local view populists can exploit, - perhaps with all sorts of unintended consequences.
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