More Monetary Competition

Markus C. Kerber

More monetary competition

EUrOP(lLIS

Papers on European economic policy and European economic law: Issue nQ 3

Markus C. Kerber

More Inonetary cOlnpetition A reformist concept for a new European monetary union

LUCIUS ltLUCIUS

The author is a Doctor of Law (ENA Diderot) and Professor of Public Fi

nance and Political Economy at the Technische Universitat in Berlin, visiting

professor at the I.E.P Paris and founder of the think tank Europolis

Contact:

Professor

Dr. iur. Markus C. Kerber

Technische Universitat Berlin

Fakultat VII Wirtschaft und Management

Sekr. H 58, StraBe des 17.Juni 135

10623 Berlin

[email protected]

www.europolis-online.org

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Preface

Preface

On the 31.5.19951 the European Commission published a Green Paper on the practical arrangements for the introduction of the single currency. The following considerations do not intend to produce a green paper on the break up of the Euro

zone. Their objective is to describe the concept of creating parallel currencies as an

instrument to reshape the Eurozone. Anyone reading the European Commission's

Green Paper today would not only conclude that it is essentially a wish-list on the

part of the planners, but, more pertinently, that the practical problems of monetary

unification had been factored out.

This imposing document also contains a catalogue of specific measures in which

the precise timeline leading to the introduction of a single currency is laid out over

80 pages. Here a number of traits are recognisable in their character from the "Pre

tence of Knowledge" (Friedrich von Hayek).2 The following text attempts to avoid

this pitfall, and seeks instead to provide a conceptual alternative from the viewpoint

of political economy.

Almost a century ago John Maynard Keynes broke with convention when he wrote

a sober analysis of the economic consequences of the Treaty of Versailles. 3 This

occurred at a time when people on all sides were united either in favour or con

demnation of the Treaty, primarily for political reasons. Keynes, meanwhile, was

setting the standards for political economy as he correctly predicted the politi

cal consequences of the economic inconsistency of the Peace Treaty. He saw, if

not in concrete terms, that the wilful ignorance of the economy as demonstrated

in the drafting of the Treaty of Versailles, independent of the political rhetoric of

victors and losers, would lead not to peace, but would sow the seeds of further unrest.

There is not a single work around today which matches the Keynesian standards of

political economy in terms of relevance and longevity. Now, as then, it is essential

to identify the political consequences of ill-conceived economic policies within

the parameters ofinternational cooperation, and to draw conclusions accordingly,

Commission of the European Communities, Green Paper on the Practical Arrangement for the Introduction of the Single Currency, Brussels, 31.5.1995, COM(95) 333 final. c£ von Hayek, Die AnmaBung von Wissen, Tiibingen 1996, P. 3 ff. Keynes, The Economic Consequences of the Peace, Macmillan, London 1919.

5


before the consequences of such ill-conceived policies take root in political terms, and can no longer be contained.

Monetary issues are economically complex and highly politicised.

Keynes described their explosive nature as follows: "Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.''''

This Keynesian observation is applied to the Euro project in the following text.

The political taboo, imposed since 2010 by the most diverse protagonists in hith

erto ineffectual attempts to rescue the Euro of giving no consideration at all to a

consensual or even one-sided dismantling of the European monetary union, has

since been broken. What is more, the establishment of a parallel currency as a sup

plementary legal tender for those countries with a current account surplus, as well

as a "monetary refuge" in the face of the continued decline of the Eurozone is begin

ning, if only incipiently, to inspire a number of intellectual imitators. On the 10th

January 2012 Robert Barro investigated the possibility, alongSide other scenarios,

of a new Deutsch Mark being brought into circulation as a parallel currency to the

Euro.5 His sober analysis was based on the observation that: "The Buro was a noble experiment, but it has failed." Barro also provides a sober description of the parallel currency as a modality for

organising the changeover from the Euro as the exclusive legal tender to a new cur

rency. Philipp Bagus's contributions on the development of the Eurozone are more

impassioned, ifless strategically tangible. Bagus - in keeping with his ultra-liberal

polemic6 - outlined different modalities for exiting the Eurozone on the 16th Octo

ber 2011. He believes that, to begin with, all domestic contracts and accounts could

be converted into the new currency proviSionally. Following a period of transition

the country would then have to switch to a new, permanent national currency. A

6

Keynes, War and Peace - The Economic Consequences of the Treaty of Versailles, 2nd edn., Berlin 2006. Wall Street Journal, 10.1.2012, "An exit strategy from the Euro." Bagus, The Tragedy of the Euro, Ludwig van Mises Institute, Alabama 2010.

Preface

further option would be the introduction of a national currency to run parallel to

the Euro. At best, this currency would be backed up to 100% in gold and would

compete with the Euro as a hard currency. It could even be brought into circulation

to pay sovereign bonds or civil service salaries. Meanwhile, the respective national

central bank would be forced to leave the Eurosystem and Germany would have to renounce its membership of the various bailout funds.

The flaw in these hypothetical transitional scenarios, based around the failure of

the Euro lies in their fixation in an exit from the Euro and a return to the national

currency. However, the proposal to introduce a parallel currency is nothing other

than a response to the continuous, expanding heterogeneity of the - as ever - sub

optimal Euro currency zone.' The following statements are intended to apply the

theoretical support lent to the concept of parallel currencies by Barro on the one

hand, and Bagus on the other hand, to the current political predicament.

cf. Brunnermeier, DarsteUung der divergierenden Inflationsraten, "Eurozone persistent inflation divergence", Princeton 24.10.2011.

7


Summary

1. In the light of the unresolved problems in the Eurozone it is essential to find a mechanism for its institutional adjustment to the prevailing economic situa

tion since 2008 which - in the event of the de facto obstruction by one or more countries, even outside of the procedure as the case may be - would initiate a process within the Council of the European Union that will result in an automatic reshaping of the Eurozone.

The reconstruction of the Eurozone can therefore only succeed if one political

instrument is found which can be perfected and implemented solely by those

countries willing in principle to reconstruct the Eurozone, without other mem

ber countries in the Eurozone being able to oppose it in the relevant EU bod

ies. This political instrument would need to lead to an automatic, irreversible

dismantling of the Eurozone, i.e. a separation of the member states according

to considerations economic homogeneity. In effect this constitutes a two-option model, in which the countries with a

current account surplus that are willing to reform join together to form a new

monetary zone, but one in which they do not dispense with the Euro as a legal

tender Simultaneously.

2. The application of the concept of the parallel currency in the present circum

stances is consistent with the economic logic of recent developments. Countries

with a current account surplus are no longer prepared to play the role of a diaspo

ra within the European Central Bank and the Eurosystem. The citizens of those

countries are even less prepared to provide a permanent financial instrument for

rescuing states in fiscal emergency (Fiscal union) as well as balance-of-payments

credits within the Eurosystem for countries with balance of payments deficits,

or countries with considerable fiscal difficulties. They have no wish to be joined

purely by an exchange rate mechanism with the reintroduction of the national

currencies, but to organise themselves into a currency running parallel to the

Euro, whilst still retaining the Euro which citizens and businesses would be free

to use as a non-exclusive legal tender.

8

Content

Content

I. A description of the problem ................................................................................. 11

II. The methodology of reconstructing the Eurozone ........................................ 17

1. The mechanics of reconstruction ...................................................................... 17

2. Currency options in place of a single currency ............................................... 20

3. Possible scenarios: Which theatre of operations? .......................................... 22

III. The scenario: France's credit rating continues to decline and

Italy requires financial assistance ....................................................................... 27

1. The amicable dissolution of the Eurozone ....................................................... 27

2. The exclusion or voluntary exit of states in fiscal emergency ...................... 27

3. The exit of countries with a current account surplus (Germany,

the Netherlands, Finland, Austria and possibly Luxembourg) .................. 28

IV. The introduction of a parallel currency by countries with a current

account surplus ......................................................................................................... 29

1. The economic ratio ................................................................................................ 31

2. Legal problems ........................................................................................................ 32

Excursus: The introduction of a parallel currency in line with

enhanced cooperation? ......................................................................................... 35

3. The procedure ........................................................................................................ 37

V. Bibliography ............................................................................................................... 39

VI. Appendices ................................................................................................................. 40

9

A description of the problem

I. A description of the problem

Since spring 2010 a number of attempts have been made to stabilise the currency area

of the Eurozone using measures which are primarily political and voluntaristic in their

nature. These attempts can be differentiated as follows:

The granting of financial assistance in the form of credit or equivalent economic

measures by the European Union, or individual Member States of the Eurozone, to

solve the respective financial crisis in a particular country ( Greece, Portugal, Ireland).

The establishment of a financial infrastructure in the form of a European Financial

Stability Facility (EFSF), which, it is hoped, will have a stabilising effect, either in

its original version dating back to May 20 10, or in its "improved" version of autumn

2011.8

The intervention of the European Central Bank, or the Eurosystem, in the form of

direct bond purchases from countries which are currently or potentially in a state

of fiscal emergency, or the easing of requirements for accepting collaterals for the

benefit of banks, in line with the guidelines for Eurosystem credit operations.9

On 7th May 2010, the Heads of State or Government of the Euro group met in Brussels and agreed, among other things, that the EU Commission should propose a European stabilisation mechanism to preserve stability in the European financial markets ("Euro rescue fund"). The Economic and Financial Affairs Council (ECOFIN Council) decided to establish a European stabilisation mechanism, consisting of the European Financial Stabilisation Mechanism (EFSM) on the basis of a EU Regulation on the one hand, and of the European Financial Stability Facility (EFSF), a special purpose vehicle for prOviding loans and credit lines based on an intergovernmental agreement of the Euro group Member States, on the other hand. On 18th October 2011 the new EFSF-frameworkagreement entered into force. From July 2013 on the ESM shall enter into force. The lending volume ofESM and EFSF together is set at 800 bn. Euro. c£ Bandilla, Das Recht der EU, Grabitz/HUf/ Nettesheim, 44th edn., Miinchen 2011, Art. 122 AEUV para 29 ff. / Art. 125 AEuv, para. 14 ff.; Kube/Reimer, NJW 2010, p. 1911; Kerber, Der Verfassungsstaat ist ohne Alternative, Stuttgart, 1 st

edn., 2010, p. 20 ff.; Hom, NJW2011, p.1398 (1400££). The European Central Bank (ECB) joined the new rescue programme on 10th May 2010 by deciding to purchase government bonds itself from then on. (ECB/2010/4), (ECB/2011/4), (ECB/2011/10) and (ECB/2010/5). Apart from that ECB continued its Securities Market Programme (SMP); c£ Kerber, Die EZB vor Gericht, 1st edn., Stuttgart 2011; Kerber/St:idter, EuZW 20 II, p. 536; Hom, NJW 20 II, 1398 (1403); Frenz, Handbuch Europarecht, Bd. 6, 1. Aufl., Heidelberg 2011, para. 3647 £; Issing, FAZ vom 6.1.2011, S. 10, "Die Wahrungsunion auf dem Weg zur Fiskalunion?"; Issing, Financial Times, 30.11.2011, http://www.ft.com/intl/cms/s/0/4164074O-1a7a-11e1ae4e00144feabdcO.html#axzz1ildI5xyx (2.1.2012): "Moral hazard will result from ECB bond buying"; Appendix 1: Beyond repair - on the legality ofECB 's actions in the euro crisis.

11


On the 8th December 2011 the Council of the European Central Bank agreed on the following measures to support the provision ofloans:

The implementation oflonger-term refinanCing operations with a life span of

36 months, combined with the option of advance repayment after a year.

The suspension of fine-tuning operations carried out on the last day of the

minimum reserve maintenance period to take effect from 14th December

2011, as well as the lowering of the current minimum reserve rate of2 % to 1 %

with effect from 18thJanuary2012.1o

This extraordinary low-interest offer is accompanied by an easing of the eligibility

criteria for the acceptance of certain classes of assets as collateral, firstly by lowering

the credit eligibility criteria for certain asset-backed securities (ABS), and secondly

by allowing national central banks to accept, for a temporary period, still performing

receivables (i.e. bank loans) as collateral, provided that these fulfil certain acceptance

requirements. As a result, 523 European banks have borrowed a total of 489.2 billion

Euros from the European Central Bank. We already know that neither the interest

terms, nor the lowering of collateral requirements - which are highly problematic in

themselves - have boosted credit operations amongst banks. On the contrary, prior

to the end of the yearll banks were not using the flow ofliquidity to boost credit

transactions, but were instead investing it with the European Central Bank as a deposit

facility.12 Not even the associated loss ofinterest could prevent the banks from taking

this particular security measure. The banks are currently unwilling to take risks on the

interbanking market. What is more, the industry is well aware that banks of those coun

tries which are potentially or already in fiscal emergency, such as Italy, Spain, Portugal

and Greece, are almost entirely dependent on refinancing from the Eurosystem. We

will know by summer at the latest whether the flood of money granted by the European

Central Bank has actually found its way into the economic cycle.

10 C£ ECB, Press release, 8.12.2011; ECB, Monthly report, December 2011, p. 8-10. 11 Frankfurter Allgemeine Zeitung, 28.12.2011, p. 17, "Banken parken so viel Geld bei der EZB

wie noch nie"; wiwo online yom 2l.12.2011, "Banken greifen sich 500 Mrd. Euro" http://www. wiwo.de/ poUtik/ europa/ ezb-programm-banken-greifen-sich-500-milliarden-euro / 5983030.html (13.l.2012).

12 Siiddeutsche Zeitung, 28.12.2011, p. 17, "So viel Angst war noch nie"; Siiddeutsche Zeitung, 3l.12.2011, p. 30, "Parkhaus EZB"; Frankfurter Allgemeine Sonntagszeitung, 22.l.2012, p. 31, "Retten die Super-Marios Europa?".

12


A final assessment of the easing of eligibility criteria for the acceptance of ABS bonds

will be possible once these bonds become due. One worrying aspect is that Italian

banks alone have borrowed a total of 116 billion Euros.13 Another potential problem

may be the ability of credit institutes to obtain credit from the Eurosystem by deposit

ing bonds issued by themselves, as long as the national government in question acts

as a guarantor.14 Irrespective of how viable the European Central Bank's measures for

stimulating lending are, it raises the rather unsettling question of whether or not the

European Central Bank will accept collaterals, in concerted efforts with the govern

ments of countries in fiscal emergency, which are only marketable with a guarantee

from an unstable sovereign debtor. 15

Regardless, too, of the controversial political nature of previous solutionsl6, and the

open question of their compatibility with European Union law, 17 neither their imple

mentation nor their foundation have served to stabilise the Eurozone, or countries

which are potentially, or already, in fiscal emergency. Within this context there are

growing calls to intensify individual "stabilisation methods", i.e. to continue to increase

the EFSF in terms of volume, and, as may be the case, to grant it access to central bank

funds (in the form of a bank licence), or to facilitate the issue of so-called Euro bonds

which, as a consequence, would result in a common liability for Eurozone member

states - contrary to Article 125 of the TFEU.1S The German government and other

individual representatives from countries with a current account surplus (the Neth

erlands, Luxembourg, Finland, Austria) were not the only bodies to object to the

13 Financial Times Deutschland, 9.1.2012, nltalienische Banken hangen am Tropf der EZB", http:/ / www.ftd.de/finanzen/ maerkte/ anleihen-devisen/ :schuldenkrise-italienische-banken-haengenam-tropf-der-ezb / 60 151984.html ?mode=print (13.1.2012).

14 ECB, Monthly Bulletin, 12/2011, p.9. 15 Frankfurter Allgemeine Zeitung, 17.12.20 II, p. 24, nTriigerische Hoffnung auf den Sarkozy-Trade" j

Reuters, 20.12.2011, nHopes for pre-holiday crisis relief ride on 3-year loans", http://www.reuters. com/artide/2011/12/20/us-ecb-loans-idUSTRE7BJOVE20111220 (23.1.2012).

16 Kerber, Wrrtschaftsdienst 1/2012, Der verfalschte Wettbewerb - Die ordnungspolitische Konterrevolution im Namen des Euros, p. 20 ff.j Hom, NJW2011, p.1398 (1400 ff.)j Neyer/Hajo/Herr, Wirtschaftsdienst, 8/2010, p. 503 ff.j Issing, Financial Times, 30.11.2011, http://www.ft.com/intl/ cms/s/0/41640740-1a7a-11e1-ae4eOOl44feabdcO.html#axzzlildl5xyx (2.1.2012): nMoral hazard will result from ECB bond buying"j cf. (ECB/2011/25) on additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral http://www.bundesbank.de/ download/ ezb/pressenotizen/20 11/20 111208.geldmarktaktivitaet.pdf (16.3.2012).

17 Frenz, Handbuch Europarecht, vol. 6, 1st edn., Heidelberg 2011, 3647 £j Kerber, Die EZB vor Gericht, 1st edn., Stuttgart 2011j Kerber/Stadter, EuZW 2011, p.536j Seidel, EuZW 2010,p. 535 ff.

18 Appendix 2: How secure are "Secure European Bonds"? Remarks on an illusion.

13


latter option, as the European Central Bank in particular has voiced concerns about

the false incentives which would arise from Community loans of this kind.19 At the

same time, in its Green Paper, launched on the 23rd November 2011,20 the European

Commission maintains that this kind oflending is desirable.21 Meanwhile, the crisis

of confidence in the sovereign debt markets is also affecting those countries which

previously boasted a solid AAA rating.22 The crisis surrounding Italy continues, and

an increasing number of smaller, core countries within the Eurozone, such as Austria23

are feeling the effects of the sovereign debt crisis of those countries in fiscal emergency.

Germany also experienced difficulties in placing Federal bonds24 recently, and came

in for criticism from the ratings agencies.25

In the light of the justified downgrading of France' s credit rating as a sovereign issuer6

the French President has voiced his support for the German Chancellor's plan to ac

celerate the creation of conditions for a fiscal union between the Eurozone countries

via a Simplified process, thereby bringing about the possibility for a supranational

body - e.g. a budget commissioner - to carry out large-scale preventive and repressive

interventions into the budgetary policies of Member States, and to induce a constitu

tional debt brake in all Member States. The following study does not intend to bestow

any special significance on this reform plan, irrespective of its political suitability, in

19 Issing, Financial Times, 30.11.2011, http://www.ft.com/intl/cms/s/0/41640740-1a7a-11e1-ae4eOOl44feabdcO.html#axzzliIdl5xyx (2.1.2012): "Moral hazard will result from ECB bond buying"; Issing, Vortrag "Krise des Euro? - Krise Europas" vom 5.11.2010 anHisslich der Jahresfeier der Akademie der Wissenschaften und Literatur, Mainz 2010, p. 16; Vaubel, Die politische Okonomie in der Bail-out-Politik in der Eurozone, 11.4.2011, http://www.vwl.uni-mannheim.de/vaubel/pdfDateien/Die _ Politische _ Oekonomie _ der _ Bail-out-Politik _in _ der _ Eurozone.pdf (2.1.2012); Kerber, Die EZB vor Gericht, 1st edn., Stuttgart 2011, p. 36.

20 European Commission, Brussels, 23.11.2011, Green Paper on the feaSibility of introducing Stability Bonds, COM(2011) 818 fmal.

21 In this Green Paper the European Commission presents three options of introducing Stability Bonds.

22 On 13.1.2012 Standard & Poor's downgraded France; http://www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&assetID=1245327295020 (16.1.2012).

23 On 13.1.2012 Standard & Poor's downgraded Austria. http://www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&assetID=1245327296787 (16.1.2012).

24 Frankfurter Allgemeine Zeitung, 28.11.2011, "Bundesanleihen ein Risiko?~ http://www.faz.net/ aktuell/ finanzen/ anleihen-zinsen/bundesanleihen-ein-risiko 1154 2536.html (2.1.2012).

25 Appendix 2: How secure are "Secure European Bonds"? Remarks on an illusion. 26 Appendix 3: French budgetary policies - The voluntary fiscal emergency - Remarks on the failure

of the European Commission to make France comply with the Stability Pact.

14


spite of the decisions taken on fiscal union at the EU Summit of8/9.12.2011, as it

is too time-consuming due to the legal complexity of amending a Treaty to fulfil the

intense expectations of the markets on governments for the purpose of stabiliSing the

Eurozone. Nevertheless, all efforts by the European Commission to adapt the present

stability pact in terms of secondary legislation, and to make its implementation more

effective - a core principle of Merkel's fiscal union - have as yet still not borne fruit.27

It is therefore unrealistic to assume that a reform, especially a reform as fundamental

as one which enables the European Commission to intervene in national budgetary

policy will arrive soon enough to meet the intense expectations of the markets.28

Furthermore, even if the ESM were to take effect, the fundamental problem of the

Eurozone, i.e. the widening gap in terms of competitiveness between northern and

southern European countries would not be solved. On the contrary, together with the

financing of balance of payments deficits via the Target II system29, moral hazard will

result from the ESM. The TARGET payment system allows central banks from Greece,

Ireland, Portugal, Spain, Italy and France to cover their balance of payment deficits by

creating and lending additional central bank money that flowed to the core countries of

the Eurozone, Germany in particular. It leads to a permanent, large scale fiscal transfer.

This development recalls the consideration by the Federal Constitutional Court in the

Maastricht ruling of the 12th October 1993.30 The ruling did more than just outline the

possibility of combining the transformation of the monetary union from a "stability

union" to a union of ever increasing indebtness with the option of an exit for Germany.

In fact, the German Federal Government is herein urged to make use of the exit options

as a matter of duty in response to an institutional, non-legally instigated transition.31

27 Kerber, Der Verfassungsstaat ist ohne Alternative, 1. Aufl., Stuttgart 2010, p. 165 ff. 28 Wissmann, 10.11.2011, Berlin, http://www.vda.de/de/meldungen/news/20111110-1.html (6.1.

2012). 29 Sinn/Wollmershauser, Target Loans, Current Account Balances and Capital Flows - The ECB ' s

Rescue Facility, NBER Working Paper 17626, November 2011. 30 BVerfGE 89, 155 (205). 31 Weber, EuZW 2011, p. 935 (938); Herdegen: GG-Kommentar, Maunz/Diirig (ed.), 62th edn.,

Miinchen 2011,Art. 88 GG, para. 27.

15


Without an explicit amendment to the Maastricht ruling - by which the public authori

ties in Germany are bound32 - this exit option ought to have become an obligation.

This applies in particular to the possible inception of the ESM with a complete transfer

policy tool box in diametric opposition to Article 88 2 GG of the German Constitu

tion. It is reasonable to expect that any constitutional appeal against this would have a good chance of success. 33

So much for the economic and political problem area. The challenge is to find out

whether, in addition to previously conceived and implemented stabilisation measures,

there are further possibilities for stabilising the Eurozone by reconstructing it in terms

of its institutions and economics. Given the risk of the Eurozone's diSintegration and

with the consequent threat to the existence of the European Union as such, it is es

sential to consider hitherto unthought-of solutions.

32 Art. 31 Law on the Federal Constitutional Court: The decisions of the Federal Constitutional Court shall be binding upon Federal and Land constitutional organs as well as on all courts and authorities.

33 BVerfGE 89,155 (202): The EMU shall be a community of stability; Remmert, in: GG-Kommentar, Epping/Hillgruber (Hrsg.), 13. Ed., Miinchen 2011, Art. 88, para. 1 ff.; Kammerer: GG-Kommentar, v. Miinch/Kunig (Hrsg.), 6th edn., Miinchen 2009, Art. 88 GG, para. 32.

16

The methodology of reconstructing the Eurozone

II. The methodology of reconstructing the Eurozone

Before the various scenarios for reforming the Eurozone are examined in greater depth

it should be stated that the realisation of these different scenarios depends essentially

on whether a conceptual approach can be found to bring about, and successfully con

clude, the necessary decision-making process amongst the Member States, without

the explicit consent of all, or just a majority ofEurozone countries.

Aside from the perennial French longing for economic government, the Eurozone is

also currently suffering by virtue of the fact that decision-making processes do not

meet the dynamics of market expectations due to their lengthiness and complexity.34

The governance of the Eurozone is characterised by endless follow-up discussions

and compromises, often brimming with repressed dissent, but which all too often lack

any kind of declaratory credibility. This also has to do with the fact that "temporary"

measures taken by the European Central Bank (qualitative and quantitative easing)

have not achieved any kind oflong-Iasting success.

The markets are acutely aware that the largest central bank in the Eurozone, the Bun

desbank, has rejected these measures and will continue to reject them together with

Luxembourg, the Netherlands and perhaps Austria and Finland. Nothing will change

in this regard, even after the redistribution of responsibilities among members of the

Executive Board of the European Central Bank of 3.1.20 12.35

1. The mechanics of reconstruction There may be a multitude of theoretically conceivable scenarios, sensible in terms of

economics, which could facilitate an adjustment of the Eurozone in qualitative and

quantitative terms with the aim of creating an optimised monetary area. Such scenarios

are only sensible, if they do not require decisions made by the European Councilor

the Ecofin Council in collaboration with the national parliaments, in other words via

consensus or qualified majorities. In the face of the diametrically opposed interests

34 Frankfurter Allgemeine Zeitung, 11.12.2011, p. 44," Meine Gipfel." 35 Appendix 4: France at the finish line - The new man from Paris does as he pleases with the ECB's

bond purchases; Zum Konfliktpotential innerhalb des Direktoriums: FAZ yom 12.1.2012, "Europas neue Euro-Hiiter", http://www.faz.net/aktuell/wirtschaft/ ezb-sitzung-europas-neue-eurohueter-11597053.html (23.1.2012).

17


of the different states, which, if anything, have increased during the fmancial crisis, it

may be assumed that the emergence of such a consensual unification process on the

reconstruction of the Eurozone is unlikely in the foreseeable future. For this reason a

mechanism for the institutional adjustment of the Eurozone to the prevailing economic

situation since 2008 must be found which - via a unilateral decision by one or more

countries - would initiate a process within the Council of the European Union that will

result in an automatic reshaping of the Eurozone. Failing this, all attempts at optimising

the Eurozone will remain stuck in the leaden decision-making processes ofEurozone

governance. In this context it is worth reiterating how strategically incompatible the

interests of different participants are: The countries with a current account surplus

(Germany, the Netherlands, Luxembourg, Finland, Austria) are not prepared to risk

their competitiveness by stimulating domestic demand e.g. by increasing salaries, and

thereby reducing their exports in order to reduce the balance of payments deficits

of other countries in the Eurozone. On the contrary, they will continue to insist on

operating at the levels of competiveness they have achieved or regained by adjusting

their national economies accordingly. On the other hand there are the Mediterranean

countries. They are neither - irrespective of their own individual interests - prepared

to implement a radical programme for restructuring public finances comparable with

the one introduced in Greece, nor are they in the position to re-establish their com

petitiveness in the short-term. In spite of their different interests, these countries are

united in their refusal to pursue policies aimed at making their countries competitive

once again, and they are unwilling to restructure their public finances. They argue in

political terms for a short-term solution to the current situation through bond pur

chases by the European Central Bank, Eurobonds and bail-outs by the EFSF, or the

flooding of their banks with liquidity along the lines of the European Central Bank's

statements of 12th August 2011. Furthermore, these countries' balance of payments

deficits are financed as part of the Target II system in such a way that the Bundesbank

already has more than 500 billion Euros in outstanding receivables - brokered via the

European Central Bank - against the countries with balance of payments deficits.36

36 NBER Working Paper Series, No. 1762, Sinn, Target Loans, Current Account Balances and Capital Flows: The ECB' s Rescue Facility, November 2011; Busch/Gromling/Matthes, Current Account Deficits in Greece, Portugal and Spain - Origins and Consequences, 26.1.2010.

18


France is a special case. In contrast to Italy the primary result of the overall budget37 is

also negative (Primary surplus is the budget result before financing costs). Nothing has

changed with regard to this structural deficit since the beginning of Nicolas Sarkozy's presidency. On the contrary, in a year of moderate growth like 2007 the country's

gross debt rose by almost five percentage points of GD P within a year, according to a

report by the Court of Auditors. 38 The disposable parts of the French national budget

primarily affect those areas where France is not prepared to make savings due to its

political parameters. For example, France is neither prepared to decommission its

aircraft carriers, nor is it willing to abandon important armament programmes such as

Scorpion or the FREM frigate programme, let alone abandon, or even decelerate the

building of Barracuda class nuclear attack submarines.39 This has less to do with the

country's military strength and readiness for conflict and more to do with the sensi

bilities of industrial regions such as Cherbourg which, if such proposed restructuring

were implemented, could severely impair the current President's chance of re-election.

The new French member of the Executive Board of the European Central Bank, Benoit Coeure, recently acknowledged the miserable state of French finances, but declined to

name any qualified measures to rectify the situation.4O

The reconstruction of the Eurozone - subject to an analysis of the individual sce

narios - can therefore only succeed if one political instrument is found which can

be perfected and implemented solely by those countries41 willing to reconstruct the

Eurozone, without the other member countries of the Eurozone having the ability

to oppose it in the relevant ED bodies. This political instrument, once in operation,

should lead to an automatic, irreversible dissolution of the Eurozone in its current

37 Cour des comptes, Rapport sur la situation et les perspectives des finances publiques - preliminaire au debat d'orientation budgetaire, 6/2009, p. 10-14: "La situation de deficit primaire avec laquelle Ia France a renoue en 2008 (- 0,6 point de PIB) n' a ete observee, cette meme annee, que dans cinq autres Etats de Ia zone euro (I'Irlande et l'Espagne notamment)."

38 Cour des comptes, Rapport sur Ia situation et Ies perspectives des finances publiques - preliminaire au debat d'orientation budgetaire, 6/2009, p. 10-14.

39 Rapport d'information depose en application de l'article 145 du Reglement par Ia commission des finances, de l'economie generale et du plan en conclusion des travaux de Ia Mission d'evaluation et de controle (MEC) sur Ie Financement des Projets d'equipement naval militaire, AssembIee Nationale, 13.2.2008

40 Appendix 5 : Benoit Coeure, Finances publiques: changer de methode pour sauver l'Etat. 41 I.e. without France.

19


form, i.e. a separation of the member states according to economically homogenous

considerations in the national economies.

2. Currency options in place of a single currency In effect this constitutes a two-option model in which the member states that are

willing to reform - which are also characterised by a relative homogeneity in their

national economies in budgetary and competitive terms - join together to form a

new monetary zone, but one in which they do not dispense with the Euro as a legal

tender simultaneously.

Equally, those countries which are close to one another in industrial and fiscal mat

ters will not only reserve the right to retain the Euro as a legal tender and currency,

but they will also be entitled to use the currency of the aforementioned countries (A

countries) as a legal tender. However, the B countries would be left with the sole option

of using the A countries' currency as a legal tender, without the necessary powers in

the field of economic and monetary policy, the A countries would be required, over

time, to withdraw from the Eurosystem, and establish their own central bank prior to

the creation of their own common currency as a legal tender. The largest central bank

in the Euro area, the Deutsche Bundesbank, lends itself to a situation such as this. It

would, at any rate, be capable of handling the lOgisticS of a change of currency within

the A country region (the Netherlands, Finland, Austria, Luxembourg, Germany etc.).

For private holders ofEuro receivables the option of using the A countries' currency

as a legal tender in the A countries' monetary area must also involve the option of

converting existing Euro debts into the currency of the A countries monetary area at

market rates. Conversely, once both currency zones have been finalised, the A coun

tries should be entitled to convert those debts which are still denominated in Euros

into the currency of the A country zone. This should prove beneficial to A countries,

especially as the economic and monetary policies of the A countries have tradition

ally been based on hard currency concepts, meaning that their new currency would

soon be subject to revaluation pressure. Compared with the Euro it would possess

an attractive par value for the purpose of currency exchange. In order to prevent the

revaluation pressure on the A currency zone from becoming too great, however, it

seems advisable to consider granting conditional membership of the A zone to one

Mediterranean country currently in the European Union. As well as acting as a cushion

against revaluation pressure, the economic benefit of not permanently excluding the

20


major real economies of the European Union from the A zone lends weight to this idea,

not to mention the diplomatic consideration of preventing a split into northern and

southern Europe within the European Union, or, as the case may be, the opportunity

to extract as much industrial substance as possible from the remainder of the Eurozone.

Only France, Italy and Spain could be considered for conditional membership to the

A Zone for political and economic reasons. The other Mediterranean countries in the

Eurozone are not Significant enough in terms of their industrial output.

The quantitative importance of France's industrial sector is a major advantage for

that country, although this is compromised by its foreign trade problems and the

dramatic decline of its public finances.42 In political terms, France is hamstrung

by the structural scepticism within the country towards the free market economy,

allied with an unconditional desire for political dominance in any cooperation

on monetary policy. This dominance makes France a less promising candidate,

especially considering that, since 2000, the country has continued to breach the

stability and growth pact unabashed.

Politically, Italy's case is strengthened by its integrative qualities within the Eu

ropean Union, as well as the importance of its economy, the third largest in the

European Union. However, the country's level of gross debt - despite its positive

primary surplus - is ominous. Without the enforcement of strict, draconian re

structuring measures - i.e. the net repayment of debt - Italy cannot be taken into

consideration.

Spain possesses similar integrative qualities to Italy but it suffers from dispropor

tionately large competition problems. This is not negated by the comparably low

level of gross debt (approx. 60 % of GD p), 43 especially as the country's deficits

remain so high (8% for the year 2011 and 20 12 respectively) that gross debts will

continue to increase exponentially.

42 Appendix 3: French budgetary policies - The voluntary fiscal emergency - Remarks on the failure of the European Commission to make France comply with the Stability Pact.

43 Programa de estabilidad, Espana 2011 - 2014, http:1 I ec.europa.eul europe2020/pdfl nrp I sp _ spain _ es.pdf (13.1.2013); Recomendaciones, consejo, recomendacion del consejo, de 12 julio de 2011, relativa al Programa Nacional de Reforma de 2011 de Espana y por la que se emite un dictamen del Consejo sobre el Programa de Estabilidad actualizado de Espana (2011-2014) (20U/C 212101), p. 2: nSe preve que la ratio deuda-PIB aumente del 60,1 % del PIB en 2010 al69,3 % en 2013, y acuse un ligero descenso en 2014.'"

21


At this moment in time none of the aforementioned countries could be considered

as a candidate to attempt to construct a parallel currency with the countries with a

current account surplus.

Despite the uncertainty over the development of the Euro monetary area there are

a number of possible scenarios which must be assessed in terms of their economic

probability and political feasibility, as well as, where necessary, their practicability in

terms of the law.

Any such projection of possible scenarios cannot, of course, be complete, all-encom

passing and 100% accurate, but it would demonstrate the necessity of a reformist

mechanism for the Eurozone before paving the way for what the author believes is

the only possible exit strategy from the current situation.

3. Possible scenarios: Which theatre ofoperations? The follOwing sketch of possible scenarios is based on the assumption that because of

the worsening structural state of French public finances44 since Nicolas Sarkozy's elec

tion in 2007, France has not only lost its AAA rating as a debtor nation, but continues

to be downgraded by the ratings agencies.

Furthermore, it might be assumed that Italy will not be in the position, without some

kind of financial assistance, to bring forward the consolidation of its public finances

early enough before the interest spread takes the country to the edge of its limits of

sustainable debt.45

Ultimately it must be assumed that the financial support given to Greece will continue,

thereby drawing on large amounts ofEFSF funds.

An assessment of the development in Portugal and Ireland is not appropriate at this

point. We do know, however, that Spain - with the approval ofEcofin - will not meet

its deficit-reduction objectives for 2012.46

44 Appendix 3: French budgetary policies - The voluntary fiscal emergency - Remarks on the failure of the European Commission to make France comply with the Stability Pact.

45 Kerber, Der verdrangte Finanznotstand, 1"1 edn .. , Heidelberg 2002, p. 43 ff. and p.70 ff.; Werding/Kaltschuetz, Modellrechnungen zur langfristigen Tragfahigkeit der offentlichen Finanzen, ifo Beitrage zur Wu1:schaftsforschung, Miinchen 2005; Moog/Raffelhuschen, Argumente zu Marktwirtschaft und Politik Nr. 115, Dezember 2011, "Ehrbare Staaten? - Tatsachliche Staatsverschuldung im Vergleich."

46 Council, Terms of Reference on Spain, 12.3.2012, http://www.consilium.europa.eu/uedocs/cms_ datal docs I pressdatal enl ecofinl 128896. pdf ( 16.3.2012).

22


H such a situation should indeed arise, the EFSF - irrespective of the necessary or

desirable leverage of its funds - would no longer be able, in terms of volume, to supply

Italy with the required financial assistance on its own.47 Furthermore, the options for

obtaining external funding would become so unfavourable for the EFSF, due to the

loss of France's credit rating as the second largest guarantor for European financial

stability,48 that it would only be possible thereafter to pass on funds to states in fiscal

emergency at interest rates which would not be of sufficient benefit to those countries.

H such a development should arise, either the European Central Bank would buy up

the sovereign bonds en masse of those countries affected49 or the demand for a debt

mutualisation (Eurobonds) would become greater. In the face of mounting dissent

we believe such a development is scarcely credible. 50 We therefore assume that the

European Central Bank, alongside Germany and other countries, will remain opposed

to the issue of Eurobonds, and that as a result the volume of bonds purchased by the

European Central bank will remain limited. The European Central bank readily admits

that upwards of a volume of 300 billion net Euros a sterilisation51 of the monetary

growth that it would generate would no longer be possible, 52 and that it would dash

with its primary goal of securing price stability:

47 Sachverstandigenrat Wirtschaft, Jahresgutachten 2011/2012, Drittes Kapitel "Euro-Raurn in der Krise~ p. 103.

48 Sauer/van Roosebeke, cep Paper, Reform der Europru.schen Finanzstabilisierungsfazilitat, S. 3, http://www.cep.eu/ fileadmin/user _ upload/Kurzanalysen/Reform _ EFSF /KA _Reform _ der_ EFSF.pdf (18.1.2012).

49 The so-called "bazooka solution." 50 Focus online, 23.11.2011, Merkel bekraftigt Ablehnung von Eurobonds, http://www.focus.de/

politik/ deutschland/haushalt-merkel-bekraeftigt-ablehnung-von-eurobonds _aid _6871 08.html (13.1.2012); Focus online vom 5.12.2011, http://www.focus.de/politik/ deutschland/ eu-schaeuble-nein-zu-eurobonds-ohne-fiskalunion _aid _691047 .html (13.1.2012); Handelsblatt online, 16.9.2011, "Eurobonds sind ein Fass ohne Boden", http://www.handelsblatt.com/politik/ deutschland/ euro-bonds-sind-ein-fass-ohne-boden/ 4611 056.html?p4611056=all (13.1.2012).

51 A form of monetary action in which a central bank or federal reserve attempts to insulate itself from the foreign exchange market to counteract the effects of a changing monetary base.

52 Frankfurter Allgemeine Zeitung, 11.11.2011, "Heftiger Streit urn die Rolle der EZB", http://www. faz.net/ aktuell/wirtschaft/ europas-schuldenkrise/ staatsschuldenkrise-heftiger-streit-um-dierolle-der-ezb-11525812.html (2.1.2012); wiwo online, 11.11.2011, http://www.wiwo.de/politik/ europa/schuldenkrise-preisstabilitaet/5886974-3.html (2.1.2012); UniCredit, Economics & FI! FX Research, 2.12.2011, S. 2, https:/ /www.research.unicreditgroup.eu/DocsKey/economics_ docs_2011_123153.ashx?KEY=C814Q!31EjqIm_lzIJDBJEw7AXAFI9rSaLM6vxf6aA4%3D&E XT=pdf (2.1.2012).

23


24

On 9 May 2010 the Governing Council of the European Central Bank ruled that

strategic operations would be implemented in order to re-absorb the liquidity

injected through the Securities Markets Programme (SMP), thereby sterilising

the impact of the interventions. Since 17 May 2010 the Eurosystem has been

collecting - via quick tenders - fixed term deposits with a maturity of seven days

approximately to the value of the total net SMP purchasing volumes on a weekly

basis. A quick tender is a "the tender procedure used by the Eurosystem for

fine-tuning operations when it is deemed desirable to have a rapid impact on the

liquidity situation in the market. Quick tenders are normally executed within a time

frame of 90 minutes and are normally restricted to a limited set of counterparties."

The ad hoc communication on the European Central Bank's website relating

to the Eurosystem's impending weekly SMP sterilisation measures states that,

"Fixed term deposits held with the Eurosystem are eligible as collateral for the

Eurosystem's credit operations."

As a consequence the SMP-purchases are not sterilised in as much as the

corresponding fixed-term deposits are used for Eurosystem's credit operations

as collateral in exchange for new central bank money, and (indirectly) to the

extent that the corresponding fixed term deposits are used as collateral in the

private money market.

I\) (]1

Rec. = receivables MB = Monetary Base G-Bond = Government Bond FT = fixed term deposits held within the Eurosystem CB = Centralbank Non-NCB = Non-Centralbank (e.g. banks) CBM = Central Bank Money

Initial Situation

Rec. MB

(a.o. G-

Bond)

CB

1.

Selling

-+ Pledging/

Repo

B Non-CB

SMP-Purchase

Rec. MB

(a.o. G-

Bond)

f---

G-Bond

CB

2.

acceptanc

-+ ofFT

EJ Non-CB

Sterilisation

Rec. MB

(a.o. G-

Bond)

G-Bond FT

CB

3.

Refinance Operation

-+ FTas

Collateral

G Non-CB

De-Sterilisation

-i ~ (1)

Rec. MB 3 (1)

(a.o. ~ 0

G-Bond)

Q. 0 0 ec '< 0 -~ (1) () 0

~ ::J C/) .-+ ~

C TE ()

.-+ 5· ec

G-Bond FT EJ .-+ ~ (1)

m c ~

0 N 0

Non-CB ::J (1) CB

The scenario

III. The scenario: France's credit rating continues to decline, Italy requires

financial assistance and uncertainty about Spain

The following possibilities arise within the Eurozone in the light of developments of

this kind:

1. The amicable dissolution of the Eurozone Such a scenario is unlikely given the absolute will of official decision makers within

the European Commission - not only France but also Germany - not to dissolve

the Eurozone and to return to national currencies. In view of the commitment of the

European elite to the current solution it cannot be assumed that the same elite would

readily accept other solutions, in particular the voluntary and amicable dissolution

of the Eurozone.

2. The exclusion or voluntary exit of states in fiscal emergency This scenario is highly unlikely in political terms, irrespective of the legal issues sur

rounding the exclusion of states in fiscal emergency, which, in the case of Greece, could

be said to be justifiable on account of that country's breach of treaties and massaging

of statistics, precisely because those states in fiscal emergency are convinced that they

have no other option but to rely on a "rescue package" from the Eurosystem or the

European Central Bank, or on some kind of bail-out, financed by the donor countries.

Additionally, in the case of Greece, and to a lesser extent Portugal, both countries are

systematically capitaliSing on their potential for damage at a political level, whilst the

economic decision makers such as Germany and France, commensurate with their

previous bail-out policies, are so far undecided as to whether to advise these countries

unilaterally to either leave the European monetary union, or, in Greece's case, to even

leave the European Union.

27


3. The exit of countries with a current account surplus (Germany, Netherlands, Finland, Austria and possibly Luxembourg)

There is no legal mandate for this kind of exit and it could prompt the European Com

mission to launch an infringement procedure. 53 Even though any such infringement

procedure, in the light of violations committed previously, which were caused or even

initiated by the European Commission, 54 would put such procedures into a political

dimension, it cannot realistically be assumed that decision-making member states in

this group would be prepared to risk such a step. This exit would be connected not

only to the creation of a new currency, but, more Significantly, the Euro would be

discontinued in parts of the Eurozone as the unique legal tender (cf. Article 128, 133

of the TFEU). Abolishing the Euro, at least in the currency area of the countries with

a current account surplus would, however, be tarnished with such negative political

symbolism that Germany, in particular - unless there is a radical domestic change -

would not contemplate taking such a step.

53 Art. 258 f. TFEU. 54 Art. 17 TEU: "The Commission shall promote the general interest of the Union and take appropri

ate initiatives to that end. It shall ensure the application of the Treaties, and of measures adopted by the institutions pursuant to them. It shall oversee the application of Union law under the control of the Court ofJustice of the European Union." Although the Commission is known as the "guardian of the treaties~ it was and is an accomplice in violating the no-bail-out clause (e.g. the Commission prepared the regulation (EU) 407/2010 and the Commission is convinced not to need a treaty modification for introducing stability bonds: "Unless a specific basis is established in the Treaty, an EU-Iaw based approach would probably require the use of Article 352 TFEU, which implies a unanimous vote of the Council and the consent of the European Parliament." cf. COM(2011) 818 final, Green Paper on the feasibility of introdUCing Stability Bonds, Brussels, 23.11.2011, p. 11.

28

The introduction of a parallel currency

rv. The introduction of a parallel currency by countries with a current account surplus.

The issue of a parallel currency to the Euro by the current account surplus countries

avoids all the disadvantages described above (III. 1. - III. 3.). The fundamental prob

lems of the Eurozone have arisen by virtue of the fact that the Euro is not a common

currency, but a single currency. The European treaties do not provide for flexible membership in the European monetary area, and so those countries that have joined are

not permitted to take a "break" from the Euro, as recommended by Kenneth Rogoff. 55

The European Union treaties commit all members of the European Union to meet

ing the convergence criteria (the economic rationality of which is open to debate),

before applying to join the monetary union. 56 Only two countries are exempt from the

obligation to create a single currency: the United Kingdom and Denmark.57 Sweden

claims the implicit right to remain outside of the experiment of a monetary union

which is composed of sovereign states, despite its convergence potential. The Euro

pean monetary union's chief failing, therefore, is the nature of the single currency. A

single currency only permits one single monetary policy, despite (irrespective of the

level of convergence) the individual national economies each demanding an agreed,

adjusted, individually-graded monetary policy.

Nevertheless, the standard response to the fundamental crisis which has resulted

from the Euro's inception as a single currency is not the abolition of the Euro, but the

introduction of a parallel currency by the countries with a current account surplus,

hereinafter referred to as the A countries.

55 Frankfurter Allgemeine Zeitung, 23.9.2011, p. 16, "Die Glaubiger sehen von einem Euro Schulden nur 30 Cent wieder."

56 Art. 140 TFEU. 57 Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and North

ern Ireland (1992), annexed to the Treaty establishing the European Community: This Protocol specifies the provisions of the United Kingdom's opt-out from moving to the third stage of economic and monetary union (EMU), meaning that it has not introduced the Euro for the time being. The United Kingdom is still in the second stage of EMU. The opt-out clause was a condition for the United Kingdom to approve the Treaty as a whole; Protocol on certain provisions relating to Denmark, annexed to the Treaty establishing the European Community (1992) provides Denmark with the guarantee that it will not automatically proceed to the third stage of EMU even if the criteria are fulfilled. The Danish Constitution requires a referendum to be held on this issue.

29


The concept of the parallel currency is nothing new.58 The application of the concept

of the parallel currency in the present circumstances is consistent with the economic

logic of recent developments. The countries in the A zone are no longer prepared to

play the role of a diaspora within the European Central Bank and the Eurosystem.

Their citizens are even less prepared to provide a financial instrument for rescuing

states in fiscal emergency (Fiscal union) as balance-of-payments credits within the

Eurosystem for countries with considerable fiscal difficulties. Nevertheless, they can

not and do not wish as a matter of principle to dispense with the Euro as a legal tender,

and insist on a monetary and economic policy based, with the exception ofItaly, on

the homogeneity ofits national economies. They therefore have no wish to be joined

long-term by an exchange rate mechanism with the reintroduction of the national

currencies, but to organise themselves instead into a currency running parallel to the

Euro, whilst still retaining the Euro which citizens and businesses would be free to use

as a non-exclusive legal tender.

The idea of a parallel currency is nothing new in historical terms. It was first developed

in the early 1990s by the then Governor of the Bank of England, Leigh-Pemberton.59

The British proposal, which emerged at almost exactly the same time as sceptical

comments by Otmar Issing,60 attempted to override the concept of the ECU as a basket

currency through the creation of the hard ECU. As there were 12 member states of

the EU at that time this would have become the 13th currency within the European

exchange rate system, and it would have required the creation of a common institution

with the sole right to issue the currency. This 13th currency as proposed by the Bank

of England at that time would have been a fully valid currency without the character

istics of a basket currency. It would have been integrated into the European Exchange

Rate System parity grid at a margin of fluctuation of + / - 2.2 %, and acknowledged as

58 C£ Issing, Einfiihrung in die Geldpolitik, 5th edn., Munchen 1993, p. 3; Jarchow, Grundriss der Geldpolitik, 9th edn., Stuttgart 2010, p. 31; Vaubel, Neglected Aspects of the Parallel-Currency Approach to European Monetary Unification, Working Paper N°30, Kieler Arbeitspapiere, Institut fur Weltwirtschaft an der Universitat Kiel; Bofmger/Kloten, Wahrungsintegration uber eine europiiische Parallelwahrung, in: Europa-Banking: Bankpolitik im Europiiischen Finanzraurn und wahrungspolitische Integration, Duwendag (Hrsg.), 1'1 edn., Baden-Baden 1998, p. 57 ff.

59 Cf. The United Kingdom's Proposal for economic and monetary union, Bank of England, Vol. 30, N°3,August 1990, p. 374-377.

60 Frankfurter Allgemeine Zeitung, 28.1.1991, p. 7, "Uber die Hard-Ecu zur Europiiischen Wahrungsunion ?"

30


a legal tender in all participating countries.61 It would - and this is the fundamental

difference to a basket currency - have been assigned a non-devaluation guarantee. 62

Based on the strongest currency, the hard ECU would be secured by the guarantee of

the participating central banks to buy back the respective national currency, or to bal

ance currency losses in the event of compensation at the request of the relevant body.

To this extent, the concept of the hard ECU is only of limited relevance in the current

context as the A countries have no desire to reintroduce their national currencies in line

with the creation of a parallel currency. As such, the creation of a European Monetary

Fund as proposed at that time by the Bank of England is no longer worth pursuing.

The creation of a parallel currency, under the logistical auspices of the Bundesbank as

the largest central bank in the A currency zone, would need to be accompanied, unlike

the creation of the Euro, by an institutional system which could react to individual

deviations amongst the A zone member states.

1. The economic: ratio Exiting the A monetary zone is the ultima ratio of possible reactions. Opportunities

would need to be created, however, either by the central bank, or by an economic and

fiscal council amongst the participating countries for measures to be taken to respond

to the growing heterogeneity within the currency zone in terms of monetary or fis

cal policy. It cannot be assumed that the inflation rate, the level of competitiveness,

the growth rate, let alone budget deficits and debt levels would progress at the same

rate in the A currency area. In particular, the institutional creation of a compensa

tion mechanism e.g. in the form of a monetary fund in the event of the conditioned

membership of a Mediterranean member state is essential. The A currency area would

inevitably become a fiscal union and would take on board the experiences since the

creation of the Eurozone.

61 Hasse/Koch, Wirtschaftsdienst 1991/N, p. 188 ff. "Die Hard-ECU - eine Ersatz-D-Mark oder ein trojanisches Pferd?"

62 In contrast to this, the "basket ECU" corresponds to the average level of the inflation rates of the member states' currencies.

31


2. Legal problems The decision of the A countries to establish a new currency in the A zone area, along

side the Euro, would be in diametric opposition to Article 128 of the TFEU. In ac

cordance with Article 128 Section 1.3 of the TFEU, the European Central Bank or the

national central banks of the ESCB are exclusively authorised to issue Euro banknotes

as a legal tender. What is more, these Euro banknotes are the only ones which are valid

as legal currency in the European Union. The creation of an A-currency in the A coun

try zone would not affect the exclusive right of the European Central Bank to approve

Euro banknotes, or their issue within the Union. However, the exclusivity of the Euro

as a legal tender within the Eurozone would be breached in flagranti. Subject to the

statements in chapter 3, this could and should result in an infringement procedure,

either on the side of the Commission or at the behest of a member state. In this case

a statement would be issued by the Commission to all member states participating

in the A currency project, in accordance with Article 258 of the TFEU, in which the

alleged infringements are substantiated in order to provide each country concerned

with the opportunity to respond.

Given the interests of the many Mediterranean countries, including France, in retaining

the Euro as the exclusive legal tender it would be impossible to prevent one of these

countries from appealing to the European Union Court ofJustice, stating that the A

countries are in breach of their commitment in terms of Article 128 of the TFEU.

This will take time, however, as before a claim can be made against a member state

the European Commission must first concern itself with the object of the claim in

accordance with Article 259 Section 2 of the TFEU.63 Further proceedings would be

conducted in accordance with Article 258 of the TFEU with the issuing of a statement

by the Commission, in which reasons are cited, giving each country concerned the

opportunity to submit its own case and its observations on the other party's case, both

orally and in writing. Proceedings may only be brought directly before the European

Union Court of Justice in the event that the Commission does not issue a statement

within three months of a relevant claim being made.

ConSidering the deadlines in the event of an infringement procedure it must be as

sumed that the decision to introduce a parallel currency, whilst retaining the Enro,

would trigger a set of dynamiCS which would give the discussion on the compatibility

63 The litigation can be speeded up by necessary interim measures (Art. 279 TFEU).

32


of the measure with Union law a lower priority. Nevertheless, preventive action should

be taken in order to avoid the delegitimizing of any such political measure with regard

to alleged illegality, or the violation of union law from a legal and factual viewpoint.

From a legal viewpoint it must be stressed that- contrary to assertions from the Eu

ropean Commission, the European Central Bank as well as from the Council - all

measures previously implemented to rescue the Euro can no longer be reconciled with

the provisions in Articles 123 - 125 of the TFEU because they have not brought any

sustainable stabilisation of the Eurozone. However, it is not only possible to invoke

this state of emergency by referring to the fiscal sovereignty of the A-countries, but

also by alluding to the threat the Euro project represents in terms of the diSintegration

of the entire union.

Ultimately, it may be pointed out that although an explicit ruling on the exit of indi

vidual member states, or a group of member states from the Eurozone is not prOvided

expressis verbis in the TFEU, such an authorisation is unavoidable and legally justifi

able if the European Union, represented by the European Commission, Council and

the majority of countries in the Euro monetary area should violate Union law, thus

rendering the continued presence of the A countries in the Euro monetary area no

longer justifiable whilst the Euro is accepted as the sole legal tender.

Once the exit of a country such as Greece has been considered,64 with at least part

of the discussion on legal policy focussed on the one-sided exclusion of the country,

then the next logical step would be to grant a group of countries who no longer wish to

gamble their fiscal solvency an organised, gradual exit from the Eurozone as monetary

area with a single currency.

The loophole invoked by the official Euro rescue policy for financial equalisation be

tween countries of unequal fiscal and commercial weight and countries with equivalent

balances, which goes well beyond Article 122 Section 2 of the TFEU, is questionable.65

64 Sueddeutsche Zeitung online, 5.11.2011, "TUI fiirchtet die Drachme", http://www.sueddeutsche.de/ geld/ debatte-um-euro-austritt-griechenlands-reisekonzern-tui-fuerchtet-diedrachme-1.ll81605 (2.1.2012); Financial Times Deutschland, 2.1.2012, "Fiir griechische Notenbank ware Euro-Austritt die Holle~ http:/ /www.ftd.de/finanzen/maerkte/:schuldenkrisefuer-griechische-notenbank-waere-euro-austritt -die-hoelle/ 60 148663.html (2.12.2012).

65 Hide, EuR2010,p. 854 (861); Wieland, NVwZ 2011, p. 340 (342); Bandilla,in: DasRechtderEU, Grabitz/Hilf/Nettesheim (Ed.), 44th edn., Miinchen 20 II, Art. 125 AEUV para. 22.

33


Certainly, the legally owed loyalty in the form of Art. 127 of the TFEU (The Euro

as a single currency) reaches its limits at the point where the fiscal solvency of the A

countries is acutely threatened. The European Union is not a Federal State, but a union

of nation states which possesses only powers derived from the member states.66 These

include monetary policy powers, provided that their application does not threaten

the solvency of a member state. In addition, the selection of a competing currency

by the A countries is the most proportionate measure of all the possible reactions to

the failure of the Single currency. After all, the A countries have no wish to dispense

entirely with the Euro as a legal tender, preferring instead, under the prevailing cir

cumstances, to found their own currency whilst opening up the Euro to competition

from other currencies.

66 Nicolaysen, EuR 2010, p. 9 (23); BVerfGE 123,267 (348): "The empowerment to transfer sovereign powers to the European Union or other intergovernmental institution permits a shift of political rule to international organisations. The empowerment to exercise supranational powers, however, comes from the Member States of such an institution. They therefore permanently remain the masters of the Treaties. In a functional sense, the source of Community authority, and of the European constitution that constitutes it, are the peoples of Europe with democratic constitutions in their states. The "Constitution of Europe", international treaty law or primary law, remains a derived fundamental order. It establishes a supranational autonomy which undoubtedly makes considerable inroads into everyday political life but is always limited factually." Cremer, in: EUY / AEUY, Calliess/Ruffert (Ed.), 4th edn., Munchen 2011, Art. 48 EUY, para. 19 ff.

34


Excursus: The introduction of a parallel currency in line with enhanced

cooperation?

Pursuant to Article 20 TEU, cooperation among member states within the param

eters of the non-exclusive competence of the Union is allowed. This enhanced cooperation must always be directed towards furthering the objectives of the Union, protecting its interests and strengthening its integration process. In accord

ance with Article 20, Section 2 of the TEU, a resolution on authorising enhanced

cooperation shall only be agreed by the Council as an ultima ratio if the Council

determines that the stated objectives of this cooperation cannot be realised in

their entirety by the Union within an acceptable period of time, and so long as at

least nine member states are involved in any such cooperation. More information

on the modalities of the vote is outlined in Article 326 f. of the TFEU. Only those

member states in favour of such enhanced cooperation may take part in any vote

on increased cooperation. The telos of the enhanced cooperation is a conse

quence of the greater heterogeneity of the ensemble of European Union member

states as a result of its expansion. The basic legitimacy of enhanced cooperation

is commensurate with the inevitability of a differentiated integration.67 The strict

eligibility criteria for a resolution in the European Council on the implementation

of enhanced cooperation, the ultima ratio, as well as a minimum number of 9

participating countries, have presented the major opponents of a multi-speed

Europe with the legal arguments to prevent such an outcome.

Irrespective of the difficult question of whether the foundation of a parallel currency

is an ultima ratio for retaining the European single market, in light of the demise

of the Eurozone, as well as the high number of members in this cooperation, the

enhanced cooperation should not only draw on the exclusive powers of the Union

in accordance with Article 3 of the TFEU. These exclusive areas of jurisdiction

include, in accordance with Article 3, Section 1 c of the TFEU the monetary policy

for those member states with the Euro as their currency. Monetary policy in the

Euro area is understood in this context in terms of Article 127 of the TFEU, and

Articles 136 - 138 of the TFEU especially.68 Articles 127 f. of the TFEU describe

67 Heintschel/von HeineggJ in: Europaisches UnionsrechtJ HandkommentarJ Vedder/Heintschel von Heinegg (Ed.)J 1st edn.J Baden-Baden 2012J Art. 20 EUY, para. 2.

68 Vedder in: Europaisches UnionsrechtJ HandkommentarJ Vedder /Heintschel/von Heinegg (Ed.) J 1. Aufl.J Baden-Baden 2012J Art. 3 AEVUJ para. 3.

35


the content of the monetary policy for those countries which have accepted the Euro as a single currency. Furthermore, Articles 136 - 138 contain special provisions for member states with the Euro as their currency. The provisions for monetary policy therefore only apply to those countries, which, unlike the United Kingdom, Denmark and Sweden have accepted the Euro as a common currency, and which have successfully applied for admittance to the monetary union in line with the convergence process. The European Union can therefore only exercise exclusive authority in terms of monetary policy for those countries which have

accepted the Euro as a single currency. If, henceforth, the group of previous

Eurozone members, as well as those countries that do not belong to the Euro currency area but which are nevertheless members of the European Union should

arrive at the decision, due to the tangible decline of the Eurozone, to consider

the creation of a parallel currency as part of their enhanced cooperation in order

to prevent the political disintegration of the Union, and to prevent damage from the implementation of the single market as a result of the final break-up of the

Eurozone, then this would embody the option of enhanced cooperation in keep

ing with the unique nature of the situation. Certainly, this example of cooperation

renforcee was not intended by the architects of the Treaties and the advocates

of enhanced cooperation any more than the decline of the monetary union was

predicted by the proponents of a single currency. However, the countries with a

current account surplus must be entitled to enhanced cooperation as a defensive option, especially if this is the ultima ratio for avoiding the damage which would result from the decline of the Eurozone, and to prevent the threat to the very

existence of the single market and the political union. The fact that legal com

mentaries69 failed to foresee this particular constellation in terms of the creation

of an increased cooperation, in accordance with Article 20 of the TEU, serves only to demonstrate the legal profession's lack of political imagination, but by no

means proves the illegality of the use of this instrument for enhanced cooperation

in existential crises of the European Union.

69 Frenz, Handbuch Europarecht, Bd. 6 Institutionen und Politiken, Berlin/Heidelberg 2011, para. 2512; Schulze/Zuleeg/Kadelbach (Ed.) Europarecht: Handbuch fur die deutsche Rechtspraxis, 2nd

edn., 2010, § 10 para. 20.

36


3. The procedure Faced with the undoubted legal problems surrounding the introduction of a parallel

currency it is necessary, beyond the grounds for justification mentioned earlier, that

such a step is prepared accordingly in terms of political legitimacy in the Council of

the European Central Bank in order to appear as an ultima ratio for the A countries.

In this regard the radical amendment is necessary, not only of the A countries' voting

behaviour in the Council of the European Central Bank, but also of their refusal to

comply with the European Central Bank's instructions, or those ofits Executive Board,

based on the decisions made against them in the European Central Bank.

Such a power, which is accompanied by the right to remonstrate as standard in civil

service law70 for national central banks, may be based on the fact that the rulings and

guidelines from the European Central Bank, in particular in terms of the easing of

eligibility criteria for the acceptance of collateral in line with the guidelines for credit

operations, as well as for the purchase of bonds from states currently or potentially

in fiscal emergency are unlawful. The A countries would not only - as is the case in

the Council of the European Central Bank - need to vote against the continuation

of the modified guidelines on credit operations and the purchase of bonds, but they

would need to determine their illegality and contradict the authority of the European

Central Bank over them in accordance with Article 12 Section 1.1, Section 2.2 of the

Protocol on the Statute of the ECB. They can do that without any great difficulty from

a legal perspective, under reference to the reasons laid out in the claim against the Eu

ropean Central Bank71 because virtually all of the European Central Bank's measures

exceed72 its mandate on monetary policy, and are solely motivated by fiscal policy. 73

The legal argument for refusing to implement rulings made by the Executive Board

of the European Central Bank is also justifiable in terms of the national constitutions.

Consequently, the Bundesbank, in accordance with Art. 2S of the Bundesbank Act, is

70 C£ §63 BBGj Battis, in: Bundesbeamtengesetz, Battis (Ed.), 4th edn., Miinchen 2009, §63 BBG, para. 1 ff.

71 C£ Kerber, Die EZB vor Gericht, 1 It edn., Stuttgart 2011. 72 Kerber, Out of bounds? On the legality of the ECB's actions in the euro crisis, http://www.euractiv.

com/ euro-finance/bounds-Iegality-ecb-actions-euro-crisis-analysis-509841 (16.1.2012) j Kerber / Stadter, EuZW 2011, p. 536.

73 Horn, NJW 2011, p. 1398 (1402 £)j Pagenkopf, NVwZ 2011, p. 1473 (1478)j Stark, Les Echos, 15.1.2012, nStark ecrit a ses ex-collegues de la BCE et critique les decisions prises" http://www. lesechos.fr/ economie-politique/monde/ actu/ afp _ 00416501-stark-ecrit-a-ses-ex-collegues-de-Iabce-et -critique-Ies-decisions-prises-2 7 52 n.php (16.1.2012).

37


not authorised to conduct any business other than that which is sanctioned according

to the European Central Bank's statute. Ifit should nevertheless conduct this kind of

business - as is indisputably the case with the purchase of bonds - then the Bundes

bank would be acting above its authOrity and would be conducting transactions which

are irrevocably unlawful, and which risk exposure in accordance with Art. 134 of the

German Civil Code (BGB) (Nullity).74

The organized voting by A countries in the Council of the European Central Bank

against the continuation of the modalities of credit operations and bond purchases,

combined with the refusal to carry out relevant instructions is not just pOSSible, but

politically and logically justifiable. The only reason to vote against measures which

were deemed acceptable by the majority in the Council of the European Central Bank

is their illegality. The refusal of the A countries to comply with these rulings would

Simply be the logically consistent option. Furthermore, the executives of the national

central banks have a direct personal interest in refuSing to follow the instructions of the

European Central Bank, as otherwise they believe they would be subject to consider

able claims for damages in the event of a collapse of the Eurosystem.7s

74 Kerber, Der Verfassungsstaat ist ohne Alternative, 151 edn., Stuttgart 2010, p. 134: Because of the violation of art. 123-125 TFEU the legal transactions necessary to implement the state bond purchases are void in the meaning of Art. 134 BGB. Cf. Heinrichs, in: Palandt, 66th edn., Miinchen 2007, § 134 para. 3; Palm, in: BGB Kommentar 10th edn., Vol. 1, Miinster/Koln 2000, § 134 para. 38; Armbruster, in: MiiKO BGB, 5th edn., Miinchen 2006, § 134 BGB para. 37 £

75 Gaiser, EuR 2002, p. 517 (535).

38

Bibliography

V. Bibliography76

76 Cf. p. 49 ff. in German.

39


VI. Appendices 77

Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5

Beyond repair - on the legality of ECB ' s actions in the

euro crisis.

How secure are "Secure European bonds"? Remarks on

an illusion.

French budgetary policies - The voluntary fiscal emer

gency - Remarks on the failure of the European Commis

sion to make France comply with the Stability Pact.

France at the finish line - The new man from Paris does

as he pleases with the ECB's bond purchases.

Benoit Coeure, Finances publiques: changer de methode

pour sauver I ' Etat.

77 The appendices are not imprinted for publication.

40

v. Literaturverzeichnis

Bank of England,

Battis (Hrsg.),

Bofinger/Kloten,

Busch/ Gromling/Matthes,

Calliess/Ruffert (Hrsg.),

Cour des Comptes,

Epping/Hillgruber (Hrsg.)

Erman (Hrsg.),

Europrusche Kommission,

Frenz,

Gaiser,


The United Kingdoms proposal for economic and monetary union, Vol. 30, Nr. 3,August 1990.

Bundesbeamtengesetz, 4. Aufl., Miinchen 2009.

Wahrungsintegration iiber eine europrusche Parallelwahrung, in: Europa-Banking: Bankpolitik im Europruschen Finanzraum und wahrungspolitische Integration, Duwendag (Hrsg.), 1. Aufl., Baden-Baden 1998, S. 57 ff.

Current Account Deficits in Greece, Portugal and Spain - Origins and Consequences, 26.1.2010; http://hdl.handle.net/1O.1007 / s10272-011-0400-9 (27.3.2012).

Kommentar zum EUY / AEuv, 4. Aufl., Miinchen 2011.

Rapport sur la situation et les perspectives des finances publiques -pn!liminaire au debat d'orientation budgetaire, 6/2009.

Grundgesetz, Kommentar, 13. Ed., Miinchen 2011.

Biirgerliches Gesetzbuch, 10. Aufl. Band 1, Miinster/Koln 2000.

Programa de estabilidad, Espana 2011 - 2014, Recomendaciones, consejo, recomendacion del consejo, de 12 julio de 2011, relativa al Programa Nacional de Reforma de 2011 de Espana y por la que se emite un dictamen del Consejo sobre el Programa de Estabilidad actualizado de Espana (2011-2014) (2011/C 212/01). KOM(2011) 818 endgiiltig, Griinbuch iiber die Durchfuhrbarkeit der Einfiihrung von Stabilitatsanleihen, Briissel den 23.11.2011.

Handbuch Europarecht, Bd. 6, 1. Aufl., Heidelberg 2011.

Gerichtliche Kontrolle im Europruschen System der Zentralbanken, EuR 2002, S. 517 ff.

Grabitz/Hilf/Nettesheim (Hrsg.), Das Recht der EU, 44. EL, Miinchen 2011.

Hade,

Hasse/Koch,

Horn,

Issing,

Die europaische Wahrungsunion in der internationalen Finanzkrise - An den Grenzen europruscher Solidaritat?, EuR 2010, S. 854 ff.

Die Hard-ECU - eine Ersatz-D-Mark oder ein trojanisches Pferd?, Wirtschaftsdienst 1991/N, S. 188 ff.

Die Reform der Europruschen Wahrungsunion und die Zukunft des Euro, NJW2011, S.1398 ff.

Einfiihrung in die Geldpolitik, 5. Aufi., Miinchen 1993. Vortrag "Krise des Euro? - Krise Europas" vom 5.11.2010 anlasslich der Jahresfeier der Akademie der Wissenschaften und Literatur, Mainz201O.

49

Mehr Wettbewerb wagen

Jarchow,

Kerber,

Kerber / Stadter,

Kube/Reimer,

Maunz/Diirig (Hrsg.)

Milbradt,

Moog/Raffelhiischen,

v. Miinch/Kunig (Hrsg.),

Neyer/Hajo/Herr,

Nicolaysen,

Osterreichische Nationalbank,

Pagenkopf,

Palandt/Diederichsen/ Thorn et. al. (Hrsg.),

Rixecker/ Sacker (Hrsg.),

Sachverstandigenrat Wirtschaft,

50

FAZ yom 6.1.2011, S. 10, "Die Wahrungsunion auf dem Weg zur Fiskalunion ?" Financial Times yom 30.11.2011, "Moral hazard will result from ECB bond buying."

Grundriss der Geldpolitik, 9. Aufl., Stuttgart 2010.

Der verdrangte Finanznotstand, 1. Aufl., Heidelberg 2002. Der Verfassungsstaat ist ohne Alternative, 1. Aufl., Stuttgart 2010. Die EZB vor Gericht, 1. Aufl., Stuttgart 2011. Der verfalschte Wettbewerb - Die ordnungspolitische Konterrevolution der EZB im Namen des Euro, Wirtschaftsdienst 1/2012, S. 20- 26. Out ofbounds? On the legality of the ECB's actions in the euro crisis, www.euractiv.com.

Die EZB in der Krise: Unabhangigkeit und Rechtsbindung als Spannungsverhaltnis, EuZW 2011, S. 536 ff.

Grenzen des Europaischen Stabilisierungsmechanismus, NJW 2010, S. 1911 ff.

Grundgesetz, Kommentar, 62. EL, Miinchen 2011,

"Pakt fur den Euro": Kann mit dem im Marz beschlossenen MaBnahmenpaket die Europaische Union die Euro-Schuldenkrise iiberwinden?, ifo Schnelldienst 9/2011, S. 3 ff.

"Ehrbare Staaten? - Tatsachliche Staatsverschuldung im Vergleich'~ Argumente zu Marktwirtschaft und Politik Nr. 115, Dezember 2011.

Grundgesetz, Kommentar, 6. Aufl., Miinchen 2009.

Neue Geldpolitik der Europaischen Zentralbank?, Wirtschaftsdienst, 8/2010, S. 503 ff.

Das Lissabonurteil des Bundesverfassungsgerichts im Kontext der Europarechtssprechung des Bundesverfassungsgerichts, EuR 2010, S. 9 ff.

Konjunktur aktuell - Berichte und Analysen zur wirtschaftlichen Lage, Dezember 2011.

SchirmtdasBVerfGvorRettungsschirmen?,NVwZ2011,S.1473ff.

Biirgerliches Gesetzbuch, 66. Aufl., Miinchen 2007

Miinchener Kommentar, BGB, 5. Aufl., Miinchen 2006.

Jahresgutachten 2011/2012, Drittes Kapitel, "Euro-Raum in der Krise."

Sauer/van Roosebeke,

Schulze/Zuleeg/ Kadelbach (Hrsg.),

Seidel,

Sinn,

Vaubel,

Vedder /Heintschel/ von Heinegg (Hrsg.),

Weber,

Werding/Kaltschiitz,

Wieland,


Reform der Europaischen Finanzstabilisierungsfazilitat, cep Paper, 26.09.2011.

Europarecht - Handbuch fur die deutsche Rechtspraxis, 2. Aufi., 2010.

Die nNo-Bail-Out"-Klausel des Art. 125 AEUV als Beistandsverbot, EuZW 2010, S. 535 ff.

Target Loans, Current Account Balances and Capital Flows: The ECB's Rescue Facility, NBER Working Paper Series, Nr. 1762, November 2011.

Neglected Aspects of the Parallel-Currency Approach to European Monetary Unification, Working Paper N°30, Kieler Arbeitspapiere, Institut fur Weltwirtschaft an der Universitat Kiel.

Die politische Okonomie in der Bail-out-Politik in der Eurozone, Occasional Paper, 11.4.2011.

Europaisches Unionsrecht - Handkommentar, 1. Aufi., Baden Baden 2012.

Die Reform der Wrrtschafts- und Wahrungsunion in der Finanzkrise, EuZW2011, 935 ff.

Modellrechnungen zur langfristigen Tragfcihigkeit der offentlichen Finanzen, ifo Beitrage zur Wirtschaftsforschung, Miinchen 2005.

Der Rettungsschirm fur Irland, NVwZ 2011, S. 340 ff.

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VI. Anlagen7s

Anlage 1

Anlage 2

Anlage 3

Anlage 4

AnlageS

Ultra vires? Ober die ausbrechenden Rechtsakte der

Zentralbank in der Eurokrise.

Wie sieher sind "Siehere-europaische Bonds"? Anmer

kungen zu einer Illusion.

Franzosische Haushaltspolitik - Der gewillkiirte Fi

nanznotstand - Anmerkungen zum Unterlassen der

Europaischen Kommission, den Stabilitatspakt gegen

Frankreieh anzuwenden.

Frankreieh am Ziel- Der neue Mann aus Paris schaltet

und waltet bei den Anleihenkaufen der EZB.

Benoit Coeure, Finances publiques: changer de methode

pour sauver I 'Etat.

78 Vom Abdruck der Anlagen ist abgesehen worden.

52

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