Well there’s your problem!
ECB executive board member Bini-Smaghi says that Germany will continue to outpace the rest of Europe growth-wise. This will make it very difficult, in a fixed exchange rate regime, for Club Med countries to maintain competitiveness. It is very difficult to pull out of recession in an uncompetitive economy unless a rise tide lifts your leaky boat. The tide looks like it is still headed out for Club Med, if not the globe.
He earlier warned developing countries with fixed exchange rates to tighten monetary policy and float their currencies. I wonder if he had anyone specific in mind…
