The governor of the Bank of Italy this time was very clear, as Reuters reports: " A currency without a state can last up to a certain moment but then you need a state and a budget union" and the ECB it is in the extraordinary position of being " the only federal central bank in a set of countries that does not have a federal structure ." Then he also stated that the situation of the Covid-19 epidemic is: " in part, it is pushing in that direction ".
On the third point, perhaps the impressions of the public may be discordant, also because, for now, the RRF has not been approved by the national parliaments and the other operations implemented, such as the SURE, are marginal and of not exactly clear utility. but let's fly over.
Basically, Ignazio Visco is right: there comes a time when a single currency cannot be governed without truly common economic policies and transfers between states. If the policies, and above all the performances, of the different countries diverge excessively, the only way to keep the monetary construct together is to follow the looser monetary policy possible, that is, the one that becomes more expansionary and poses fewer problems from the point of view. of debt, private (Netherlands) or public (Italy, France Spain), but this risks happening with possible inflationary increases in the financially stronger countries. In reality, the economic, and I would add cultural, structure of the Germans has so far prevented this eventuality, but this still remains on the plate, and the inflationary blaze could hit economic systems less ready to face this eventuality, such as those of, for example, some euro countries. of Eastern Europe.
A federal state could develop a common economic policy and develop a system of transfers between states, which, at least in theory, could compensate for inequalities, perhaps by measuring the common fiscal policy, currently non-existent, on the basis of agreed and common unemployment targets. average income and economic growth.
Perfect, but this requires that this construct be approved, and in a reasoned and explicit way, by European citizens, with a true common democratic process, not with the forcing, among other things always reversible, of the "Cession of sovereignty", which always occurred with indirect approval of parliaments not always an expression of the actual political majority in a country? Why don't we ask this step from the French, Germans, Italians, Spaniards, Austrians, Dutch, Portuguese with a clear and explicit referendum? Is it not that there is a fear, far from unfounded, that the various peoples will vote against this project? We recall that the French rejected a first draft of a European constitution. Would the Germans vote in favor of interstate transfers? And the Dutch, who even oppose the non-repayable RRF? How would Italians themselves experience a free vote, after an almost uninterrupted decade of unelected governments?
Federal Europe, if it is born, will not have to be born from a currency, but from a democratic process, Denying it means setting the seeds both for the end of the Euro and for those of the European Union itself.
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/visco-bi-leuro-puo-durare-solo-se-la-zona-euro-divent-un-unico-stato-chiederlo-ai-cittadini-europei-e-cosi-brutto/ on Tue, 23 Feb 2021 18:03:33 +0000.