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BANKING

Emu agonistes

It's 2003 and European monetary union (Emu) has gone badly wrong.

In fact the French have pulled out and resumed printing their own money. Spain and Italy were forced out too, leaving a hard core that looks horribly like a Deutschmark zone.

Fiction? Perhaps. But each phase of this horror story is so plausible that it serves as the perfect antidote to any remnants of europhoria inhabiting the body politic of Europe. Emu is not wrong, concludes this cautionary tale, but 1999 is too soon for the first wave.

David Lascelles, former Financial Times banking editor, now co-director of the Centre for the Study of Financial Innovation (CSFI) has chosen the parable form to convey a serious message: Emu is a badly thought out "economic experiment on a colossal scale".

The tale, The Crash of 2003, pretends to be the findings of an official UK government inquiry into a chain of events which started with a first wave of Emu in 1999, excluding the UK, Denmark, Sweden, Spain and Italy. Spain and Italy joined in 2000. And then Emu exploded, because the French social economy couldn't stand the strain. On the road to ruin there are speculative attacks on currencies just before the final fixing of exchange rates.

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