Law /
The Euro, is it a good idea for Poland? [66]
Hm... I'm not sure about that, country unilaterally pegged usually don't have access to central bank loans, and is vulnerable to currency attack a'la Soros vs BOE. When country finally violently "unpegs" then all debtors are screwed, that is way Latvia is fighting so much to not "unpeg"...
It depends, revaluation can be done in a controlled manner, again, just as Denmark has always done. If you are in control of your money supply, you control the exchange rate.
Latvia is screwed because they're already in ERMII and are stuck.
There are, however, advantages that come with the Euro. For instance, it would make borrowing easier (the ECB has deep, deep pockets.)
Borrowing doesn't seem to be a problem at the moment. Just hedge against fluctuation. Most governments did just that with their structural funds.
It's far from a tiny bit. Currency devaluation is one of the keys to China's success.
I think I managed to mix up conversion with devaluation.
Anyway, you've just made a great argument for
not outsourcing monetary policy. The RMB is pegged as well. It's a great policy to protect them from the effects of monetary policy overseas. The Chinese really have it down. They are protected from attacks on their currency, and devaluation of the currencies of their trading partners. Their investments will never suffer too much from currency fluctuations.
The euro is bad for Poland precisely because that isn't possible. The NBP couldn't have devalued PLN over the last 18 months to make Poland attractive to foreign capital. Growth would have been dead in the water.
But hey, I like the ECB myself. They are doing what a central bank should be doing, attempting to control inflation...