I move:
That Seanad Éireann takes note of the Report of the Joint Committee on the Secondary Legislation of the European Communities on the Commission's proposals on economic and monetary union which was laid before the Seanad on 28th June, 1978.
It is a happy coincidence that this motion should be before the House at a time when the Leader of the Government, the Taoiseach, is in Europe meeting the leaders of the other countries to discuss matters affecting fundamental aspects of the policies which will determine the future of the European Economic Community, and in particular as they affect the European Economic Community in relation to monetary policy.
The report which the Joint Committee on the Secondary Legislation of the European Communities produced recently and which was discussed in the open committee reviews the procedures and progress towards economic and monetary union particularly over the last decade. It explored some of the policies that governments or the EEC might follow and the effect that individual governments might have in relation to influencing the EEC as a whole.
It was not possible, nor was it the intention, that a committee of this kind should produce a policy as such. That is the function of government but it is somewhat a new departure that a committee of this kind—are now empowered to look at policies that are in the minds of the people in Europe in the form of communications. The committee looked at such matters and, as I said earlier, put a lot of emphasis on the monetary policy aspect of economic and monetary union.
In putting this committee report before the House, it is not possible for me to say that the committee are advocating a policy. That is not on. It is possible for me individually to take a particular view and, since our Government have not declared a definite policy as such in relation to the item that I am going to cover we are still free to speculate, shall we say?
The smaller countries operating in the EEC can have very little influence on monetary policy in terms of the quantity of money that the smaller countries use, but, it should be possible for them to have the power of knowledge and to use any knowledge they have to influence the European nations towards adopting policies that will be good for Europe as a whole but also, of course, will be good for each individual nation—in our case Ireland. The position is that at the moment there is a crisis in the sense that unemployment is growing—we have been discussing it in the Green Paper debate—but that unemployment is growing across the world and in the meantime nations, particularly the nations of Europe, are not moving quickly enough to put themselves in a position to deal with that crisis. My position is that a proper monetary policy is required to do that.
In the earlier days of discussion of economic and monetary union people spoke about the grand leap. Among other things the grand leap was to replace overnight all national currencies by one currency. What I will be advocating here is a little leap—a little leap which in effect involves the introduction of a new currency that would not replace existing ones but would exist side by side with them.
We know from comment in the press and elsewhere that Chancellor Schmidt is sitting there at the controls of a giant locomotive and everybody wants him to move it faster. If he moves it faster, then Europe can grow and countries like Ireland, striving for high growth rates that are required for full employment, will have a better chance of achieving those targets. What is going to come out of the discussion in Bremen when the heads of state get together is going to be the key point and I have some speculation about that.
We could look at the European situation rather like a train where the German is the lead locomotive, at the end there is the UK pushing or sometimes dragging its wheels, in the middle there is the French locomotive with its own carriages and squashed in between there are the Benelux countries and Denmark and Ireland. If Schmidt looks back from his driving seat and sees all those locos behind him with the carriages not coupled properly and without a proper medium of communication between them to pass one service from one to the other he says, "Why the hell should I move faster when I have those fellows playing around behind upsetting the balance and probably making the whole thing unstable? I will slow down until they make up their minds". Basically what I am saying is that if the game of free market enterprise is going to be played the rules of the game have to be agreed in the beginning and not made up as the game progresses because that is a formula for failure.
In particular the United Kingdom, which is the loco at the end which slows down and maybe switches off its engine periodically and drags the whole thing to a halt, is one of the big problems and the shuddering that arises from that loco can transmit a wave of disturbance right through the whole system. It can become acute when an election arises. It is interesting now in the press speculation about Bremen, people are saying that maybe Mr. Callaghan will not go along with it because he will not want to give up some of the autonomy of sterling at a time when he is moving into election. Mr. Callaghan in the past, speaking on the present exchange situation, said, "We cannot dignify the present arrangements with a name of an international monetary system. They are more like a series of ad hoc makeshifts in which the world stumbles blindly from one currency to another”. If he said that at one time he cannot unsay it when he is running up to election. I would hope that what comes out at the discussions will be something more positive than a delaying tactic.
The form of monetary policy which I would like to see used is the so-called parallel currency scheme. It is described in detail in the Joint Committee report. The idea is that the European Economic Community would issue a new currency which would operate in parallel with existing national currencies. One suggestion is that it should be called the Europa. One attraction of the parallel currency scheme as advocated by some people is that, given that the currency is linked to the basket of national currencies, it would have an extraordinarily powerful influence on inflation control, because these people are advocating that the Europa would have constant purchasing power which would be guaranteed by adjusting the link rate between national currencies and the Europa in relation to the way national inflation or the consumer price index goes. There are many advantages to this scheme. One of the main ones is that, once the Europa exists and currency notes are held in various countries in the form of Europas, then the countries concerned cannot welch on agreements. Once they have put themselves behind the launching of a currency they have to stand by it. Also, because it is a parallel currency it does not make that grand leap that everybody is afraid of. It takes a little leap and allows people to learn how the scheme would work over a period of time.
In relation to the Irish situation there are advantages in that it would immediately modify and eventually do away with the effects of the green £ and the monetary compensatory amounts. It would stop us depending completely on the UK in that every time they shift their interest rate or make a change in their own monetary policy we have to do the same because we are linked with them. If we are operating in the European scene, we sit at the same table as and will have a voice with the other European countries in determining the way in which the monetary system is going to be run. The regional policy, on which we have placed so much of our faith in bringing about a correction of the imbalance between the wealth of a country like Ireland compared to Germany and others, has not worked as effectively as we would have liked. We have a regional fund, but that is not a real policy. The existence of a parallel currency would highlight the differences and would force the EEC to come out with a more effective regional policy. In the past people have said "We will not go along with monetary union unless you get a decent regional policy". These should go in parallel. The monetary policy should not be played as an attraction or reward to countries like Germany for an exchange of an agreement in the regional policy. The two should go hand in hand.
We should have within the next few years a new note operating in Europe and called the Europa. We can think of it as a tree with as many branches as there are countries in the EEC—nine now, and maybe twelve when the enlargement occurs. The design could indicate that Europe has its own specialised culture to offer, and could suggest health because the blood-flow of Europe, which is money amongst other things, would be healthy and functioning properly. My prediction is that when the Bremen Conference is over Chancellor Schmidt will be thinking this way and will be proposing something like the notion of a parallel currency even if it is based on the European unit of account. That might be the first step in the development of a parallel currency. I would be willing to take bets on that. I hope that what I have said might stimulate my honourable colleagues to contribute to this debate.
