The zloty’s loss is Poland’s gain as exports surge

I was quoted in the Financial Times' article under the above title:

"Marcin Piatkowski, senior economist at the World Bank’s Warsaw office, even says that the new EU member states are going to make life more difficult for the troubled PIIGS of the eurozone, as they have to compete against aggressive countries trying to catch up to western Europe, who also have the advantage of still having their own currencies."

If we didn't have Greece, we would have to invent one.

Was just thinking about the blessing that the Greek crisis is turning out to be for the euro zone, Polish and the whole European Union economy.

Two arguments. First, with stagnating private demand and prospective fiscal tightening (now likely to be much faster and deeper than previously expected) a weak euro is the only chance for the euro zone to entrench economic recovery and strengthen debt sustainability. American, Asian and Latin American consumers will pay the bill. The whole European Union will benefit, including Poland and other EU-10 countries who heavily rely on the strenght of the German recovery, which is mostly based on exports. At the current exchange rate Poland is "the China of Europe" - there is no other EU country that would be so competitive, given that the zloty has depreciated the most among all EU currencies (ULC based, increased productivity included).

Second, the Greek crisis has given rise to euro zone institutional reforms which were needed in the first place, but were not likely to be implemented without the Greek shock. So, thanks to the Greeks we are moving closer to fiscal, supervisory and labor market federalism. As the Polish saying goes: "what does not kill you, where strenghten you". seems to fit the current euro zone crisis perfectly well. Americans would just say that "every cloud has a silver lining".

A European Monetary Fund? We already have one!

Recently there has been all this discussion about potentially creating a new institution--a European Monetary Fund--whose objective would be to replace the IMF as the lender of last resort to euro zone countries. The idea did not catch on and in the end the IMF has been invited to do its job in Greece (and probably soon elsewhere too).

I have just understood why European have given up on the EMF idea - I think this is because the IMF has become de facto EMF, without many people noticing.

How else to explain that the IMF decided (or rather it was decided by the IMF's French Managing Director, DSK) to contribute EUR 250 billion to the new European EUR 1 trillion stability mechanism without even formally asking the IMF's Executive Board for approval?

There was a lot of grumbling before about the Europeans not being able to use their muscle at the IMF because of unconcentrated voting power. There were calls for creating a single euro zone seat or even a single EU seat.

Now without any changes to the voting structure, the IMF has suddenly become a European piggy bank, where European, but also US and Asian money is unexpectedly supporting Greece and the euro zone.

It now turns out that Europeans were right to insist on appointing their own guy as the head of the IMF after all. It will be now much harder for them to let the position go when DSK retires.

I have just shared these thoughts with Prof. Eisuke Sakakibara, Waseda University, a Japanese guy who originated the idea of creating an Asian Monetary Fund following the Asian crisis in late 1990s (and who participated in today's NBP conference on the future of the international monetary system). He could not agree with me more.