Time to join the euro

10 years ago,the Euro was born.

It came in for immense criticism and some pundits felt that that the concept would not survive.

So is it the right time to join?

The arguments against have alwyas been fundementally ones of national pride,not wanting to lose the pound and worries about the inherent weakness of the concept.

2008 may have destroyed the latter argument.Today the euro vies for world supremecy with the dollar and stands at near parity with sterling

Writing in the Times this morning,Oliver Kamm suggests that the time may be right.

It is time for a reckoning. There have been economic stresses and political controversies in the eurozone, but the euro has plainly been a success. It now outstrips the dollar in the value of notes in circulation. It has established itself as the alternative international reserve currency to the dollar. Countries within the eurozone have survived the financial crisis in much better shape than, say, Iceland or Hungary

he says and argues that

The euro has worked. It has broadened and deepened European financial markets, reducing the cost of capital for business. It has achieved reserve currency status because investors have confidence in its future stability.

The barriers to joining are now largely political and this is shown by William Hague's piece in this morning's Mail.

Hague famously entered the 2001 election telling voters that voting Conservative was the last chance for the country to save the pound.It wasn't as Gordon Brown was never the convert that Tony Blair was to integration.

Hague argues that

When you think about it the idea of abandoning your currency when it has lost a lot of its value is a pretty stupid one: rather like thinking that if you have let your house run down in value until it is the same as a smaller one next door, it is a good time to swap.

and uses the argument that a common interest rate across the continnt would harm Britain

British families have many more of their mortgages in floating interest rates than people on the continent; we have a much bigger financial services sector, and more of our trade and investments are denominated in U.S. dollars.
All of these factors mean that the right level of interest rates set for people in Greece, Germany or Italy is not necessarily the right one for us.

Returning though to Kamm he says that

It used to be argued that the greater importance of the financial services sector to the UK economy made euro membership unsuitable for us. Surely no one can now maintain that a common European approach to banking supervision and capital adequacy is a threat. The weaknesses of the UK financial system are glaring and need to be remedied. If the UK were in the euro, then it could advance effective European regulation, while opposing impractical schemes that would simply distort markets.