Welcome to the Institute of European Studies project to promote dialogue about EU-Canada relations. Here you will find traditional research in the form of brief policy papers and analysis. The site is also an interface for the public to express their opinions on EU-Canada relations in general and economic and environmental cooperation in particular. The site will hopefully act as a gateway to the wider news and opinion forums that are available.
Economists know that you can’t have everything at the same time. This is particularly true in international economics where the trilemma truism reigns: You can’t simultaneously have a fixed exchange rate regime, open capital markets and an independent monetary policy. Current developments have reminded us that this trilemma actually contains a fourth component: free trade. In other words, currency policies have trade implications. And ever since the Brazilian Finance Minister, Guido Mantega, warned of a looming currency war, international political attention is beginning to turn to the murky world of currency markets.
Tagged as:This weekend the University of Victoria will be hosting a conference titled 'Financial Crisis, EMU and the Stability of Currencies and the Financial System'. It will bring together a number of experts from the field including the Institute's own Dr. Hübner.
Preliminary Conference Program: Click here for additional information.
(Source: Flickr - Chris van Diemen)
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Nothing can stop legal obligations. According to article 140 (1) of the Lisbon Treaty, the Commission and the European Central Bank (ECB) must assess the fulfillment of the conditions for the adoption of the Euro by Member States with a so-called derogation at least every two years, or at the request of a Member State. Despite the rumors of a break-up of the Euro zone, and untouched by the deep economic troubles of the Euro economies and the Euro itself, the Commission practices a business-as-usual policy by issuing its latest assessment. And the winner is ESTONIA!
Last year’s economic record looks impressive. Estonia easily beat the benchmarks regarding HCP inflation, long-term interest rates, budget deficits and public debts. The country did its legal homework by putting all the laws, rules and principles in place that are needed to introduce the Euro. Finally, it successfully participated in ERM II during the last two years. The latter is no small feat, given that the currency board was under economic and political pressure when the 2008 global financial crisis hit the country. Under conditions of a currency board, there is no space for any independent monetary policy, and the whole burden of adjustment is put on the shoulders of fiscal and wage policies. Unemployment skyrocketed in 2009 reaching 15%; nominal wages shrunk by 3 % on average, and the budget deficit was kept at 1.7% of GDP. There is no doubt that Estonia implemented a severe austerity program that may become the model for other troubled Euro zone economies.
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