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英国论文网:British and Dutch GDP:The spread of the cri(7)


labour market is a key compensating factor, with a coordinated approach to wage
setting allowing real wages to fall during downturns and rising international
labour mobility providing an additional adjustment mechanism.
Moreover, the potential gains from a flexible exchange rate are surely dominated
by the capacity for financial shocks to drive currencies away from the values
that would be justified by current macroeconomic fundamentals. While the role
of risk premium shocks is most dramatic during crisis episodes, it is also an everpresent
factor during more tranquil periods, especially for small currencies that are
thinly traded in less-liquid markets. The consequences of such shocks have been
scaled up by the rapid growth in cross-border investment positions over the last
decade: the balance sheet impact of currency fluctuations in many cases dominates
their impact on trade volumes.
The current crisis has also illustrated that banking supervision and crisis
management are very demanding tasks that pose a challenge even to the largest
countries that have deep talent pools. It is plausible that very small countries do
not attain the ‘minimum efficient scale’ to run these systems in an effective manner.
For these reasons, the logic of very small countries participating in monetary
unions is compelling. The rationale of membership is even stronger for a country
– such as Iceland – that has suffered damage to its credibility as the sponsor of a
national currency.
It is important to emphasise that there is no close substitute for membership of
the euro area. In particular, unilateral euroisation or the adoption of a currency
board would represent much weaker forms of monetary discipline, since such
regimes are more easily reversed in the event of a crisis. These routes are much
more expensive from a fiscal viewpoint relative to joining a multilateral monetary
union as a fully-integrated member.
Moreover, the importance of EU membership should not be discounted, even
in the narrow context of a discussion about the monetary regime. In particular,
the multi-dimensional commitments that are involved in EU membership have
the effect of embedding each member country in a deep institutional and intergovernmental
network set of relations with other EU member countries. The
current crisis has highlighted that Iceland’s relations with other European countries
proved to be relatively weak under the stress of a crisis situation and many
problems could have been avoided if it had enjoyed a better level of comprehension
and empathy among its European neighbours.
16 The First Global Financial Crisis of the 21st Century Part II
Although membership of the EU and the euro area cannot be achieved in the
very short run, announcing an intention to enter the process of applying for


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