In addition, adopting the Euro would mean giving up independent monetary policy. Unilateral monetary policy across regions with disparate economic performance c

In addition, adopting the Euro would mean giving up independent monetary policy. Unilateral monetary policy across regions with disparate economic performance can be very problematic. Consider the case of Hong Kong, which has effectively adopted the US dollar (pegged in 1983). Despite the fact the economy has been growing strongly and inflation is running around 4-5%, interest rates are near zero, as dictated by the Fed. As a result, fixed asset prices have soared, with residential real estate rising 100% over the last five years. Those that own assets benefit and everyone else gets screwed as asset price changes feed into cost of living without wage growth to compensate. No surprise then that HK has the most unequal income distribution in the developed world. [1] This also works the other way. So as others have pointed out, until there is a proper fiscal union (which I certainly can't see in the foreseeable future), the decision to not adopt the Euro seems wise. [1] http://en.wikipedia.org/wiki/List_of_countries_by_income_equality http://en.wikipedia.org/wiki/List_of_countries_by_income_equ...