A single currency without fiscal federalism increases divergence between member states

Evidence

The experience of the euro area has shown that a single currency without fiscal federalism leads to an increase in differences between states, that is, to greater polarisation. … Because of this original sin, the euro is a ‘currency without sovereign’ — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 347

Categorization

• XREF: Connects the eurozone austerity debate to African monetary integration; echoes the Optimum Currency Area literature. — connects to: Fixed exchange rates force austerity when competitiveness declines; Devaluation and revaluation simply shift the fixed CFA-euro parity — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 122; Global interdependence weakened national economic control and Keynesian policy — Anthony Giddens, The Consequences of Modernity, 188 (+3 more)

Related

• The euro produced divergence among European economies rather than convergence (similarity 0.86)
• Fixed exchange rates force austerity when competitiveness declines (similarity 0.80)
• A monetary union without fiscal union lacks shock absorbers against asymmetric regional shocks (similarity 0.80)