Confidence in the Euro has fallen again as multiple finance sources claim a Greek default on its loans is “inevitable”. The desperation to save the Euro is seen in the European Central Bank seeking external funding to save Greece – basically the ECB needs a bailout so that it can deliver a bailout.
Kathleen Brooks of Forex.com reports that further attempts to save the Euro could come in the form of splitting the Euro into two currencies, one for poorer nations and one for richer.
This “two-tier” Euro was outlined as a possibility almost exactly a year ago in the Telegraph. EU proponents were talking of this new hierarchical currency system as a way to financially “protect” all countries within the two Eurozones.
An important comparison with this is the Dollar’s role as a world “reserve currency”. The goldless fiat dollar can be created by the billions whenever the US establishment wants, but other countries trading in the dollar don’t have that luxury. This position of currency creation privilege has been key to US global dominace through application of financial rewards to other nations for compliance with US interests or withdrawl of financial support as a punishment. This is precisely what will occur under a “two-tier” Euro. The nations holding power over the “super-euro” will use carrot and stick finance to manipulate the economies and politics of the sub-Euro. Nations will be economically classed in a hierarchy.
Whether such a system can easily be imposed is uncertain. Even if it is, the populations of the sub-Euro will hold resentment at their assignment as economic second-class citizens and will turn against the EU. Such a class system can’t be plausibily maintained by an institution claiming to support global equality.