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"Home Away from Home" (October 2001)
The European Parliament has no fixed seat and spends a small fortune each month trekking from Belgium and Luxembourg to France. By Michael Z. Wise

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Currents in Currency

January 2, 2002
 
urope took another significant step toward unification this week with the introduction of the euro as the standard of currency in twelve European Union countries. Though many Europeans regret the passing of their nations' distinctive currencies—bearing patriotic depictions of national treasures and heroes—others welcome the advent of a more centralized European economy as indicative of a unified Europe's collective strength. Two recent Atlantic articles have argued that currency-sharing among countries will offer a stabilizing effect, and that it is a phenomenon likely to increase in years to come.

In "Euroland, Open for Business" (November 1999), Robert A. Levine argued that Europe's adoption of a single currency would play a crucial role in empowering the European Union—not only economically, but militarily and politically as well. If member nations enact future economic-policy decisions wisely, he argued, the new European Monetary Union is likely to spur significant economic growth throughout Europe. And if such growth does in fact occur, then further political unification will follow.
[The unification of European monetary policy] is immensely significant for world prosperity and stability. The gross domestic product of the EMU is nearly equal to that of the United States; if Britain joins, it will be 10 percent larger. "Euroland"—a favorite name among Germans—may someday become as politically and militarily powerful as the United States....

If the potential is realized, the United States will have a powerful new competitor—but also a partner to share the burdens of world leadership.
The phenomenon of currency consolidation has also been taking place closer to home. In "Getting Used to the Greenback" (May 2001), Benjamin Ryder Howe reported that El Salvador, like many other South American countries, has replaced its national currency with the U.S. dollar. Visiting El Salvador shortly after the switch, Howe discovered widespread confusion and resentment. Having to count unfamiliar American coins (upon which no numerical values are inscribed) and translate prices from the old currency to the new had left many Salvadorans scratching their heads. Others lamented having to carry coins and bills bearing portraits of United States Presidents instead of figures important in their own country.

A former chief economist at the Inter-American Development Bank, Ricardo Hausmann, told Howe that despite resistance to the idea of one currency losing out to another, currency consolidation is perhaps inevitable and necessary in the twenty-first century. Howe explained,
In an age of global economic shakeups and speculative attacks on currencies, few developing nations can handle the intricacies of monetary policy. Better, [Hausmann] said, to take shelter with a powerhouse like the euro or the dollar....

"The idea that each country should have its own currency is very much an idea of the twentieth century," he told me recently. "It wasn't so in the nineteenth century, and it probably won't be in the twenty-first."
—Sage Stossel


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Sage Stossel is an editor of The Atlantic Online. She draws the weekly cartoon feature, "Sage, Ink."

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