Comment Paper to Chapter “The Exchange Rate Regime as a Tool to Advance Reform: Success or Failure?”
The main value of this paper is that it attempts to explain the euro as a potential tool to advance reform in Europe. As the euro was introduced to progress further necessary reform by removing monetary and fiscal policy autonomy and by introducing price transparency, it would have been successful if reform had progressed and economies converged. Unfortunately, only a few countries, Germany for example, have been successful. If the institutional reforms succeed in bringing about reforms to increase the competitiveness of all members, then the euro can still fulfill its role. This will be the true economic test as to whether the euro will survive or not. However, Prof. Kaji predicts that many countries will, sooner or later, choose a similar arrangement, for example, pegging the euro or “a kind of euro”, even if the euro failed this time. Why will they do so? Because, for better or worse, the European economy is closely integrated. In this decade, the world economy has moved to a “new global regionalism” in North America, East Asia, Latin America, the Gulf States, and Africa. The problems that face euro area countries issue a grave warning about the important role of exchange rate. We realize how strong governance affects the effectiveness of economic policies, and in this sense, this paper is worthwhile reading for all. Regarding this paper, I would like to clarify some points as follows.