Forex Blog: Currency Trading News & Analysis.

June 2nd 2008

A Chink in the Euro

The upcoming 10th Anniversary of the European Central Bank is being greeted with a flurry of commentary and analysis of its brief history. The consensus is that both the bank and the Euro currency over which it presides have come a long way. The respect that investors have come to accord the Euro with can be witnessed in its rapid appreciation over the last five years. The ECB has also been singled out for praise for its commitment to fighting inflation.

But the the fact that the overall Euro-zone economy is on solid footing masks some important disparities within.The economies of the so-called PIGS countries (Portugal, Italy, Greece, and Spain) for example, are faltering in the wake of the credit crisis, while their neighbor, Germany, notched strong quarterly growth of 1.5%. Some of the newest members of the EU are struggling, due in part to the Euro’s rise. This has led some commentators to return to the principal argument that initially opposed the Euro- that the economies of the Euro-zone were and continue to be too diverse, and that it does not make sense for them to be governed by a common monetary policy. Some of the original members, namely Italy, are openly disdainful of the perceived negative impact of the Euro on their respective economies. In fact, it is possible, though unlikely, that a protracted economic recession could lead some of them to abandon the Euro. The Times Online reports:

"The failure of eurozone governments to implement the necessary reforms during the recent good times may eventually sow the seeds of the break-up of the eurozone and the demise of the euro. Nothing lasts forever."

Read More: Reform failures may still kill off the euro

SocialTwist Tell-a-Friend
Posted by Adam Kritzer | in Central Banks, Euro | No Comments »

Sponsored Offers

FREE Daily Email Updates

Enter your email address:

Delivered by FeedBurner

Have Questions? Want to Share Your Review?

Be heard. Please share your reviews today!

Neighboring Posts

© 2004 - 2018 Forex Blog.org. Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.