Economy · first published 2020-11-24
An alternative to the euro: the ECU-2 basket | Sami Miettinen and Juhana Vartiainen on Puheenaihe 131
The episode where Sami Miettinen's ECU-2 proposal meets a serious opponent. Puheenaihe put him opposite MP and economist Juhana Vartiainen, who does not buy it. The proposal is to reverse the euro's own construction: reintroduce national currencies as parallel money and define the euro juridically as their weighted sum. Vartiainen's objection is direct — if the willingness to tax German surpluses does not exist, no currency architecture creates it, and Finland's adjustment problem is domestic. Also covered: Target2, federation without transfers, fiscal dominance and Greece in 2015.
An alternative to the euro: the ECU-2 basket | Sami Miettinen and Juhana Vartiainen on Puheenaihe 131
Summary: The episode where Sami Miettinen’s ECU-2 proposal meets a serious opponent. Puheenaihe put him opposite MP and economist Juhana Vartiainen, who does not buy it. The proposal is to reverse the euro’s own construction: reintroduce national currencies as parallel money and define the euro juridically as their weighted sum. Vartiainen’s objection is direct — if the willingness to tax German surpluses does not exist, no currency architecture creates it, and Finland’s adjustment problem is domestic. Also covered: Target2, federation without transfers, fiscal dominance and Greece in 2015.
Key Themes
- Is there an alternative to the euro that does not break it up: Discussed from 00:00 onward.
- Defining the euro juridically as a basket; floating or fixed within a band: Discussed from 03:00 onward.
- Vartiainen: what is the added value over national currencies: Discussed from 06:00 onward.
- The binding constraint is political will, not architecture: Discussed from 09:00 onward.
- Libera’s 2014 book, and whether Finland is a weak euro country: Discussed from 12:00 onward.
- Adjusting to low inflation is a domestic problem: Discussed from 15:00 onward.
- Germany’s Hartz reforms and the end of incomes policy: Discussed from 18:00 onward.
- Automatic counter-cyclicality already sits in the public finances: Discussed from 21:00 onward.
- Dornbusch overshooting, and remembering Pentti Kouri: Discussed from 24:00 onward.
- Target2 surpluses as an indirect claim: Discussed from 27:00 onward.
- The basket manager would need the EMF role and restructuring powers: Discussed from 30:00 onward.
- Reform the labour market inside the euro; Denmark’s pegged krone: Discussed from 33:00 onward.
- Federation without transfers: Switzerland as the model: Discussed from 36:00 onward.
- A European army, and Finland’s two per cent: Discussed from 39:00 onward.
- Systems tailored to large countries, and EU-wide social security: Discussed from 42:00 onward.
- Migration into an ageing continent; what Target2 actually is: Discussed from 45:00 onward.
- If Italy left, who settles the balance: Discussed from 48:00 onward.
- The recovery fund as a Keynesian move in a liquidity trap: Discussed from 51:00 onward.
- Would Finland become a larger net payer: Discussed from 54:00 onward.
- Centralising power is itself a risk: Discussed from 57:00 onward.
- Small reforms, and the EU as a relative game: Discussed from 60:00 onward.
- Public demand outrunning supply, and inflation expectations coming loose: Discussed from 63:00 onward.
- Fiscal dominance, or can the ECB force restructuring: Discussed from 66:00 onward.
- Greece 2015: emergency liquidity as a political instrument: Discussed from 69:00 onward.
- The microeconomic case for one currency: Discussed from 72:00 onward.