Letter: Monetary union will allow fiscal foolishness

From Mr Philip Fawcett

Sir: The recent series of speeches on economic and monetary union appears to signal the death of the "hard ecu", which is a pity as the idea itself has considerable merit.

Not only would it be easier to introduce than full EMU, but it is already happening. The ecu is increasingly used for European cross-border trade and could well become the dominant means of payment for such transactions within the next few years, even without further moves on monetary union. The adoption of the sou as a de facto European commercial currency would bring significant benefits to business in reduced currency conversion costs and reduced exchange risk.

Linking the ecu to the Deutschmark bloc and the adoption of policies to ensure that the ecu is never devalued against any other EU currency would guarantee its hardness while leaving national governments with such monetary "sovereignty" as is possible within an economy dominated by trade with its community partners.

Yours faithfully,

Philip Fawcett

Welwyn Garden City,

Hertfordshire

10 February