NOT THE TIMES NEWSPAPER

GREECE, CYPRUS, PORTUGAL -
CASE FOR RE-INTRODUCING
ORIGINAL CURRENCIES


The divergence between the weak and
stronger economies of the EU's single
currency continues to grow. Until the
inevitable fiscal and political union occurs,
should weight be given to the
re-introduction of the original currencies
in these countries. They would function
in tandem with the euro, allowing Greece,
Cyprus and Portugal to become more
competitive.

In the 1990s, Argentina experienced similar

problems to those of Greece and other weak
members of the eurozone. In that country the
peso was fixed and freely convertible with
the US dollar from 1991 to 2001. After a
period of deceptive success, sustained by
massive foreign loans, the currency
collapsed, resulting in civil unrest and a
surge in poverty. The decoupling of
the peso from the dollar allowed Argentina
to return to growth.

In finding a solution to Greece's economic

problems and those of the eurozone's
other weak economies, we should remember
that from 1979 to 1999 economies, now part
of the eurozone, functioned within a dual
currency system - the ECU which was the
common currency and a domestic one in
each case. The system was stable and
satisfactory, allowing countries to exchange
using a common currency, while checking in
each country uncontrolled expenditures
abroad and the flight from the domestic
currency.

A move to reintroduce a dual-currency
system would boost competitiveness,
generate growth and reduce sovereign debt.