Third side of the ecu
Sir: Articles in The Spectator on the case for or against monetary union (Sir Keith Joseph, 28 July, Samuel Brittan, 21 July, etc) give the impression that the debate falls into two camps. In fact, there is a third way of looking at exchange rates and inflation which avoids the pitfalls of a central European Bank on the one hand, and independent state sovereignty on the
LETTERS
other. This argument is for private banking within countries and between nations — in short, monetary competition at state and international levels. Spelt out by the liberal thinker F. A. Hayek, this idea is a depar- ture from mainstream economic thinking far more radical and promising than any- thing provided by Jacques Delors or his opponents.
Private money avoids the huge risk of all forms of monopoly money — the threat of abuse by those with the levers of economic power. 'Clipping the coinage' for short term ends is much harder if you are competing with other coin suppliers. For details on this idea, see 'Private Money, The Path to Monetary Stability', (1988), the Institute of Economic Affairs. Hobart Paper No 122, by Kevin Dowd.
Tom Burroughes
20 Sandown Road, Ipswich, Suffolk
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