EKIP– Expert Club for Economics and Politics A Different Opinion
My position against the adoption of the euro and the corresponding national plan is based on the following main arguments.
1. Keeping the national currency does not mean a worse economy. Sweden is a good example of this.
- Sweden's economic growth since 2003 has been between 1.5% and 3%, i.e. higher than that of the eurozone. The overall economic situation in Sweden is up to 24% better than if it had potentially joined the eurozone. The monetary benefits range between 185 and 590 billion dollars for Sweden. https://www.nationalekonomi.se/sites/default/files/NEFfiler/47-7-bo.pdf
2. Single supervision by the ECB and membership in the eurozone will not prevent bank failures or bailouts with taxpayers' money. Eight eurozone banks have been rescued through direct state aid or state guarantees since 2014:
- Banca Popolare di Bari - 900 million euros
- Banca Carige - 3 billion euros
- Caixa Geral de Depositos - 3.9 billion euros
- Banca Monte dei Paschi di Siena - 5.4 billion euros
- Cyprus Cooperative Bank - 6.1 billion euros
- Norddeutsche LB - 7.9 billion euros
- Veneto Banca and Banca Popolare di Vicenza - 16.8 billion euros
3. The Eurozone and full membership in the Banking Union will not prevent money laundering through the banking system. In support of this position, I present the following cases from the last few years:
- ABLV Bank was closed after US authorities accused the second largest bank in Latvia of money laundering
- Danske Bank - the bank's Estonian branch was closed after the largest money laundering scandal in history implicated it in laundering over $200 billion from oligarchs
- Deutsche Bank - implicated in mirror trading of securities that enabled capital flight and money laundering
- FBME Bank - closed following a report from the US Treasury Department stating that FBME was involved in money laundering, terrorist financing and support for international organized crime
- ING - the bank pays a 675 million euro fine after an agreement with the prosecutor's office for shortcomings in the fight against money laundering
- Nordea - fined €95 million for failing to comply with anti-money laundering requirements
- Pilatus Bank - closed after the chairman of the bank's board of directors was arrested in the US on money laundering charges
- Satabank - closed Maltese bank with Bulgarian owner due to money laundering investigation
- Société Générale - fined $1.3 billion for failing to combat money laundering and circumventing economic sanctions
- Versobank - closed because it does not comply with anti-money laundering requirements
4. The ECB's monetary policy is unsustainable and destructive for the Union's economy. This is also the position of the German constitutional judges in their decision of May 5, 2020 on the participation of the German Central Bank in the ECB's quantitative easing program. In particular, the highest German court ruled that:
- The ECB's quantitative easing program (PSPP) must be qualified as an act outside its powers, despite the European Court of Justice's ruling to the contrary.
- The volume and duration of the PSPP may make the effects of the program disproportionate.
- The European Court of Justice's self-restricted policy review standard allows the ECB to gradually expand the scope of its own powers; or at least largely or entirely exempts these ECB actions from judicial review.
- There are significant losses to private savings (as a result of the ECB program).
- PSPP and low interest rates allow economically unviable companies to remain in the market.
- The longer the program lasts and the more its total volume increases, the greater the risk that the Eurosystem will become dependent on the policies of the member states, since it can no longer simply stop or reverse the program without endangering the stability of the monetary union.
- There is no balance in the economic effects of the program, neither at its launch nor at any other point in its implementation.
5. Lack of quality public debate on the topic and detailed public analyses by the BNB and/or the Ministry of Finance.
- A special committee of experts is being created in Sweden, which is preparing a 522-page (!!!) report on the pros and cons of eurozone membership. The report in Swedish: https://www.regeringen.se/4ae72d/contentassets/596c8088e7e64f17aaa4a88425b8b440/sverige-och-bankunionen-sou-201952.pdf Here is a 33-page summary in English https://www.government.se/legal-documents/2019/12/sweden-and-the-banking-union---summary/
Another good report on the topic is by the Swedish Institute for European Studies http://www.sieps.se/publikationer/2019/better-in-or-better-out-weighing-swedens-options-vis-a-vis-the-banking-union/
- In Bulgaria, there is a very good report on the topic here from BLO and EKIP: https://ekipbg.com/wp-content/uploads/2018/05/Bulgaria-Evrozona-analiz-3.pdf
6. And last but not least: the currency board introduced in Bulgaria works perfectly and guarantees the stability of the national currency. The Eurozone would "untie the hands" of the authorities in the country and lead to an increase in public debt. There are many examples of this: Greece, Italy, Spain, France, etc.
