When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in .

You've reached your limit of one free article.

Get unlimited access to Worldcrunch

You can cancel anytime .

SUBSCRIBERS BENEFITS

Exclusive International news coverage

Ad-free experience NEW

Weekly digital Magazine NEW

9 daily & weekly Newsletters

Access to Worldcrunch archives

Free trial

30-days free access, then $2.90
per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch
Germany

Bring Back Deutsche Marks! (Euros Can Stay) - A German Case For Parallel Currencies

A ten D-Mark bill
A ten D-Mark bill
Günther Lachmann

In the face of the European debt and financial crisis, Hamburg-based economist Dirk Meyer has a "third way": a system of parallel currencies.

A professor at the Helmut Schmidt University of the armed forces, Meyer is convinced that in its present form the euro zone is simply not sustainable in the long term. He used an address to the Berlin Freie Wähler (free voter) association earlier this week to describe a standing European dilemma: on the one hand, the euro is presently causing huge economic problems; on the other it is politically and economically indispensable.

"If we go on the way we have been, it’s going to cost us somewhere between 75 and 150 billion euros a year," Meyer said. However, giving up the euro and returning to national currencies would mean "each state to itself, and the disintegration of the European Single Market" – and the cost of that, Meyer added, was "incalculable," although he estimated it at between 300 and 400 billion euros.

Hence, according to Meyer, the euro has to be here to stay, but it should be complemented by national currencies. He characterized today’s Europe as a two-speed Europe, the requirements of which cannot be met by the euro as a single currency. He said the principle of the Single Market could only work if there were competing currencies.

From a legal point of view, there were ways that individual member states could accommodate this, Meyer said, pointing to exceptions in fishery and farming policies.

In Greece, the drachma would be reintroduced as the official currency while the euro would stay on as an equivalent currency. The National Bank of Greece would split into two departments, with the Euro Department linked to the financial and political institutions of the Euro Zone, and the Drachma Department responsible for an independent monetary policy with flexible exchange rates.

Greek exception

However, possible bankruptcy of the Greek state also has to be factored in, Meyer said, and were that to happen Greece should be excluded from the euro zone and go back to using the drachma as a sovereign currency while the euro would remain as a legal currency.

"If we do it that way we can reduce the temptation to take the money and run, both in terms of capital flight, but also the risk of a run on banks," Meyer said. The devalued drachma would make Greece more competitive and lead to new growth in the mid-term.

Under certain circumstances, a return to the D-mark could also be beneficial to Germany if the euro continued on as a parallel currency, Meyer said. The mark could act as a form of security if the euro area were hit by inflation, but there would also downsides, he said: for example, anybody with a life insurance policy in euros would be paid out in euros, and would get badly hit in the event of euro-area inflation.

Meyer added that he operated under the assumption that were the D-mark to be reintroduced in Germany the euro would inevitably play second fiddle to it.

Free Voter federal chairman Hubert Aiwanger said: "We’re looking for alternatives to current policies that lack alternatives with regard to Europe. We need new concepts instead of seeing Germany as the one that has to cough up ever-more for ever-longer periods."

Aiwanger does not believe Greece can pay its debts back, and that the reintroduction of the drachma parallel to the euro could be a reasonable solution. Other countries could later adopt the system as well. "There’s a disconnect in the currency zone we presently have," he concluded.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Future

Livestream Shopping Is Huge In China — Will It Fly Elsewhere?

Streaming video channels of people shopping has been booming in China, and is beginning to win over customers abroad as a cheap and cheerful way of selling products to millions of consumers glued to the screen.

A A female volunteer promotes spring tea products via on-line live streaming on a pretty mountain surrounded by tea plants.

In Beijing, selling spring tea products via on-line live streaming.

Xinhua / ZUMA
Gwendolyn Ledger

SANTIAGO — TikTok, owned by Chinese tech firm ByteDance, has spent more than $500 million to break into online retailing. The app, best known for its short, comical videos, launched TikTok Shop in August, aiming to sell Chinese products in the U.S. and compete with other Chinese firms like Shein and Temu.

Tik Tok Shop will have three sections, including a live or livestream shopping channel, allowing users to buy while watching influencers promote a product.

This choice was strategic: in the past year, live shopping has become a significant trend in online retailing both in the U.S. and Latin America. While still an evolving technology, in principle, it promises good returns and lower costs.

Chilean Carlos O'Rian Herrera, co-founder of Fira Onlive, an online sales consultancy, told América Economía that live shopping has a much higher catchment rate than standard website retailing. If traditional e-commerce has a rate of one or two purchases per 100 visits to your site, live shopping can hike the ratio to 19%.

Live shopping has thrived in China and the recent purchases of shopping platforms in some Latin American countries suggests firms are taking an interest. In the United States, live shopping generated some $20 billion in sales revenues in 2022, according to consultants McKinsey. This constituted 2% of all online sales, but the firm believes the ratio may become 20% by 2026.

Keep reading...Show less

The latest