5 ms·

It's a very common practice for economies to peg their sovereign currency to a trading partner; there are on the order of 66 countries pegged to the US Dollar,

It's a very common practice for economies to peg their sovereign currency to a trading partner; there are on the order of 66 countries pegged to the US Dollar, and 20-odd pegged to the euro. If a country wanted to move off of the euro, it would be pretty easy to create a sovereign currency pegged to the euro 1:1 by the countries central bank. Then in the future they could simply unpeg (or change the rate) if that became advantageous.

inglor_cz 5y ago
"it would be pretty easy to create a sovereign currency pegged to the euro 1:1 by the countries central bank" How will you protect the peg? If moving off the euro is taken as a sign of your weakness, defending the peg against the market shorting you will bleed your central bank dry.
- User23 5y ago
  It’s easy to put a ceiling on your country’s currency trading range. The Swiss did this. Whenever the franc got too high their central bank would sell however much was necessary to stabilize the price.
  - exoque 5y ago
    And they stopped doing that because it wasn't maintainable.
    - User23 5y ago
      Of course it was maintainable. They stopped doing it because the situation in the EZ more or less stabilized. The Swiss central bank can always sell as many Francs as they want at any price that is below current bids and that’s always the case when defending an upside limit. They’re never going to run out of Francs to sell because they can issue without any technical limit.
- ben_w 5y ago
  IIRC, this was effectively what happened with the U.K. on Black Wednesday: https://en.wikipedia.org/wiki/Black_Wednesday https://en.wikipedia.org/wiki/Black_Wednesday
pyuser583 5y ago
EU members aren’t fully sovereign. Some sovereignty is surrendered when joining the EU: > "The EU law has primacy over national law and all decisions by the European Court of Justice, including orders for interim measures, are binding on member states’ authorities and national courts,” chief spokesperson Eric Mamer said. https://abcnews.go.com/International/wireStory/eu-court-polands-disciplining-judges-breaches-eu-law-78857560 https://abcnews.go.com/International/wireStory/eu-court-pola... Also, a Eurozone country can’t abandon with Euro without leaving the EU. The context here is comparing the the EU with the British Empire. Statements like “The EU law has primacy over national law” make it pretty clear what it means to be a member of the EU.
- fulafel 5y ago
  Since you can exit, it's different. Generally countries enter various nominally binding arrangements all the time, like ratifying UN treaties that are considered by courts to be part of national legislation etc. So "full sovereignty" in this sense is not so common. (Also, EU law is drafted via a representational democracy system, so this use of power has an important quality of legitimacy that law handed down from the empire would lack)
  - pyuser583 5y ago
    The ability to leave doesn’t imply sovereignty. There are non sovereign territories that have the right to become independent- but which are nonetheless non-sovereign.

inglor_cz 5y ago

"it would be pretty easy to create a sovereign currency pegged to the euro 1:1 by the countries central bank" How will you protect the peg? If moving off the euro is taken as a sign of your weakness, defending the peg against the market shorting you will bleed your central bank dry.

User23 5y ago
It’s easy to put a ceiling on your country’s currency trading range. The Swiss did this. Whenever the franc got too high their central bank would sell however much was necessary to stabilize the price.
- exoque 5y ago
  And they stopped doing that because it wasn't maintainable.
  - User23 5y ago
    Of course it was maintainable. They stopped doing it because the situation in the EZ more or less stabilized. The Swiss central bank can always sell as many Francs as they want at any price that is below current bids and that’s always the case when defending an upside limit. They’re never going to run out of Francs to sell because they can issue without any technical limit.
ben_w 5y ago
IIRC, this was effectively what happened with the U.K. on Black Wednesday: https://en.wikipedia.org/wiki/Black_Wednesday https://en.wikipedia.org/wiki/Black_Wednesday

pyuser583 5y ago

EU members aren’t fully sovereign. Some sovereignty is surrendered when joining the EU: > "The EU law has primacy over national law and all decisions by the European Court of Justice, including orders for interim measures, are binding on member states’ authorities and national courts,” chief spokesperson Eric Mamer said. https://abcnews.go.com/International/wireStory/eu-court-polands-disciplining-judges-breaches-eu-law-78857560 https://abcnews.go.com/International/wireStory/eu-court-pola... Also, a Eurozone country can’t abandon with Euro without leaving the EU. The context here is comparing the the EU with the British Empire. Statements like “The EU law has primacy over national law” make it pretty clear what it means to be a member of the EU.

fulafel 5y ago
Since you can exit, it's different. Generally countries enter various nominally binding arrangements all the time, like ratifying UN treaties that are considered by courts to be part of national legislation etc. So "full sovereignty" in this sense is not so common. (Also, EU law is drafted via a representational democracy system, so this use of power has an important quality of legitimacy that law handed down from the empire would lack)
- pyuser583 5y ago
  The ability to leave doesn’t imply sovereignty. There are non sovereign territories that have the right to become independent- but which are nonetheless non-sovereign.