only parity of the euro could begin to be relaxed – The Financial

It is a fact that the euro can not exchange right for all its members all the different 19 time.

However, under the command of the European Central Bank (ECB), Mario Draghi might be taking it to better adapt to more countries for longer.

Angel Talavera , an economist at Oxford Economics in London, calculated for Bloomberg Benchmark what would have been the exchange of “balance” eight economies in the euro zone between 2011 and 2015, the exchange rate is best suited internal and external profile of an economy.

the economic strength and positive balance of payments of Germany justify that the euro will be quoted around $ 1.40, while the problems of Greece would require was below parity with the dollar.

at the beginning of the mandate of Draghi, the euro was too strong for almost everyone and, as is typical, has located more in line with the needs of the “core” economies, including Germany.

That has not been beneficial. “What would normally occur with a country that had its own currency is that this will appreciate or depreciate over time to help correct these imbalances,” Talavera said.

“In the case of the eurozone obviously can not happen these two things and that these imbalances are not corrected but rather most of the time are amplified.”

Talavera calculations confirm this.

at the peak of the crisis of sovereign debt in 2011, the differential between the optimum type for Germany and Greece was $ 0.32. Late last year, the gap had widened to 0.42.

But things are changing. The latest ECB policies have weakened the exchange rate, bringing it closer to what would be appropriate for countries like Italy or Spain .

Since the announcement the negative rates in June 2014, the euro fell nearly 20 percent against the dollar.

While this value is still too much for Greece, is closer to the average, so the average differential between the optimal exchange rate countries and the actual level of the euro dropped from 0.25 dollars in early 2011 to 0.14 at the end of 2015.

However, given the structure of the euro, is limited what you can make the current set of policies

according to the study Oxford Economics who made Talavera, the ECB’s monetary policy always has been affected by a paradox. While has been “generally correct for the common currency area as a whole, it has been wrong for most members individually most of the time.”