Dr. Leila Talani, the director of studies for the politics with economics programme of the department of European studies at the University of Bath, U.K., and a lecturer at the London School of Economics and Political Science, spoke at Hamilton on February 27. She presented a lecture titled "The Dollar, the Euro, and the Future of European Integration" in the Fillius Events Barn. Prof. Didar Erdinc of the economics department and Prof. Alan Cafruny of Hamilton's government department served as hosts and commentators for Talani's lecture.
Talani discussed the competition between the Euro and the American dollar. She began by explaining the history of the EU and the EMU, and why certain EU states have adopted the economic union while others have not. The EU adopted a single currency in 1999, and in 2001, the Euro was unveiled, she explained. The actual creation of the Euro was not the most important part of this new economic structure, she noted; rather, the common monetary policy established between nations served as the most important aspect. "Many believe that this was necessary and part of [essential] economic development," Talani said.
Thus, out of this new monetary policy, the European Central Bank was created, with its central goal to keeping prices and inflation stable. The European Central Bank is the most independent of all central banks in the work, Talani explained; not a single government has sovereignty over the bank and therefore is independent of public opinion and politics.
Many scholars question why certain successful nations opted to join the EMU and the EU, giving up their own stable economy and currency. Talani cited Germany as a prime example of this idea. Germany and many other nations, she said, wanted to increase their economic competitiveness within Europe, as well as on a global scale, and therefore joined the organization.
"One drawback of having a strong currency is that… you lose part of your competitive power," Talani said. Regardless, many nations decided to give up their own currency to join a larger economic power. She explained why various nations wanted to or did not want to join the EMU or the EU, using France and the U.K as examples.
Talani described economic issues within the EMU, pointing out how nations like Germany and France have not benefited and in fact have not abided by the organization's stability pact, a pact which limited all nations' deficits and spending. Although no sanctions have been implemented for the nations' disregard for the policy, the pact is now being reevaluated.
The remainder of Talani's lecture focused on the early depreciation of the Euro, the recent depreciation of the American dollar, and what effects these depreciations had no the global market. She distributed a handout conveying the changes in the U.S. dollar and Euro exchange rate from 1999 to 2004; she also explained in-depth how various nations' export economies were affected when the Euro depreciated in 2000, specifically focusing on Italy's economy.
In early 2001, Talani explained, the U.S. was coming away from a "magic moment," and by September 2001 it was clear that the United States was ending its business cycle and nearing an economic recession.
Talani concluded that the depreciation of the U.S. dollar was not because Europe became stronger, stating that "The depreciation of the dollar was not because of the intrinsic strength of the ECP or the European economy."
After the lecture, Professors Didar Erdinc and Alan Cafruny offered brief remarks, and an extensive question and answer session followed the discussion.
The lecture was sponsored by the Arthur Levitt Public Affairs Center.
-- by Emily Lemanczyk '05
