by Emiliano Brancaccio
A frequently discussed proposal for an alternative to the euro is a return to an updated version of the old European Monetary System. Oskar Lafontaine and Martin Höpner, among others, explicitly support this solution. To make this proposal viable it would be necessary to impose sanctions on countries that use deflationary policies to accumulate current account surpluses. An effective system of sanctions could be based on some limitation on the indiscriminate capital mobility to and from these countries. If we focus on wage, fiscal and social deflation, we can call this proposal “Monetary Labour Standard”. This solution could be applied immediately and independently by an individual country just as it could be extended step by step to further agreements between countries.