Re: first day of the euro

From: Mike Lorrey (
Date: Fri Jan 04 2002 - 19:08:41 MST

Christian Weisgerber wrote:
> Mike Lorrey <> wrote:
> > I don't expect the Euro to seriously challenge the US Dollar for
> > dominance as the world currency, partly because it is so new, partly
> > because there are different flavors for each member country,
> There are not.
> > and mostly because it is dependent upon 12 central bank systems
> > instead of one.
> Wrong again. Learn about the ECB.

a) Do different countries have the EXACT same bills and coins in every
detail? No, they don't. As several europeans here have said, there are
very slight but noticable differences on the paper bills and the reverse
side of every coin has graphics particular to the country in which it
is stamped.
b) Therefore, there are 12 different national mints involved in the
production of the new european currency, and the 12 different central
banks who run those mints.

All it takes is for one of those mints to decide to over or under
produce their local currency to entirely mess up the money supply for

All that has really occured is that all 12 countries have changed the
name of their currency to the 'Euro' and have agreed to tie the value of
each to that of all other 'Euros', much as many countries in the world
tie their own currency one for one to the US Dollar. The heads of each
national Central Bank belong to the European Central Bank, but that
doesn't mean that each national bank will actually honestly deal with
everyone else.

Up until a little bit ago, Argentina tied its Peso to the US Dollar in a
similar scheme, thinking that that was all they needed to guarantee
economic stability. They cheated on the backside though, and now have
destabilized markets all over South America.

Fortunately, it is easy for people to see the difference between an
Argentine Peso and a US Dollar, so there is little negative impact to
the US, but imagine if all the countries in the Americas had decided,
say, ten years ago, to change their local currency names from the "Peso"
to the "Dollar" and to tie their currencies one for one to the US
Dollar, while retaining control of their own mints, and of their own
national tax systems and securities (stocks and bonds) markets.

Then imagine that a few years ago, say, Mexico's mint officials entered
into a scheme with their colleagues in the Presidency to overproduce
Mexican 'Dollars' without reporting the overproduction to the FTAA
Central Bank, using the money for political slush funds, for meeting
government revinue shortfalls, etc... When the scheme breaks in the
news, as all eventually do, worldwide trust in any 'Dollar' drops and
the economies of every nation in the Americas suffers.

A prime real world example today of this is with OPEC. So far as the
world is concerned, the primary currency of any OPEC nation is the
Barrel of Crude Oil. Every OPEC nation supplies Barrels to the world
market supposedly according to specific quotas set by the agreements
that OPEC makes with its member nations, yet in actuality, many, if not
all, member nations cheat on their quotas, overproducing Barrels and
thus oversupplying the market, which leads to a glut and a decrease in
the value of a Barrel, which negatively impacts the economies of the
member nations.

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