EU Members Club and Unattractive Currency Proposition

Wednesday, 29 September 2010

Back when the Eurozone was first formed and the monetary zone was first created, the idea of one central trade zone was an exciting one. Obviously though, in order to enable the coming together of the economic countries, tight entry restrictions had to be placed on each individual member – before their application was accepted.

This, of course, was to bar the likes of Slovenia and Slovakia from entering the zone, because the risk that their economies would bring down the entire zone was too high.

The same could have been said for the likes of Greece, Spain, and Portugal. Whilst Germany and France were very good at managing their national finances – and already fitted in to all of the requirements created, the aforementioned countries were right on the cusp of acceptance.

Greece, for example – had a horrendous budget deficit, which – no matter what way you looked at it – failed every perspective of the entry criteria. Nevertheless, not to be excluded from the exciting idea of piggybacking off the economic success of other Eurozone countries, the smaller countries went ahead and covered up the true extent of their national finances.

Greece – being the country with the most current economic problems, actually artificially reduced their own budget deficit in order to enter the Eurozone. At the time, we are sure that Germany and France knew exactly what was going on – but simply turned a blind eye to the practice. If only they knew the trouble that the nation would have caused it here in 2010, perhaps their acceptance of the practice would have been slightly different.

So, we now turn to the current day – where 4 of the major participants of the Eurozone economic union are facing financial ruin. Portugal, Greece, and co. are now the ones needing economic assistance, much to the frown of more secure nations.

If anything else, that has now emphasised the need to ensure that the entrance scam that the likes of Greece and Portugal pulled never happens again. No doubt, meetings have already taken place to secure the future of the Eurozone – and to ensure that countries such as Slovakia and Slovenia, who are keen to join, are only able to do so through intelligent and genuine economic management.

Time will tell whether or not this "new" formula for entrance requirements will be released publicly, or simply kept as a silent agreement by member countries.

Nevertheless, it will be interesting to see whether or not upcoming countries are able to succeed in gaining entry to the economic and financial zone in the future – given the rocky road that we have just travelled.