The distressed countries in Europe’s southern periphery fear exiting or being expelled
from the currency union, partly because they believe they would lose
all the euro’s advantages permanently. This fear could be laid to rest
by making the eurozone an open currency union.
The core idea is to offer exiting countries the status of associated member, allowing them to adopt their own currency temporarily with the option to return to the euro at a later stage. An associated member would spare itself the trauma of a real depreciation inside the eurozone, which can only be achieved through a reduction of prices and wages that almost unavoidably entails economic contraction and mass unemployment. Moreover, an associated member could receive financial help from the other eurozone countries. It could adjust its exchange rate quickly to restore competitiveness and, once it had fulfilled all reform commitments, could fully rejoin the eurozone.
Read more: http://www.ft.com/intl/cms/s/0/b2c75538-da35-11e1-b03b-00144feab49a.html#axzz22GtiHhyY
The core idea is to offer exiting countries the status of associated member, allowing them to adopt their own currency temporarily with the option to return to the euro at a later stage. An associated member would spare itself the trauma of a real depreciation inside the eurozone, which can only be achieved through a reduction of prices and wages that almost unavoidably entails economic contraction and mass unemployment. Moreover, an associated member could receive financial help from the other eurozone countries. It could adjust its exchange rate quickly to restore competitiveness and, once it had fulfilled all reform commitments, could fully rejoin the eurozone.
Read more: http://www.ft.com/intl/cms/s/0/b2c75538-da35-11e1-b03b-00144feab49a.html#axzz22GtiHhyY
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