اتحادیه پولی: درس های اروپا، چشم انداز آمریکای لاتین

This paper analyzes the long-run sustainability of monetary unions. We infer from the EMU experience that for monetary union to be sustainable, fiscal policy rules are necessary. That does not imply a formal Stability Pact, however. Labor market flexibility is more important for sustainability than cross-border labor mobility. Sound financial markets are another precondition. Lessons for Latin America and the Caribbean include, first, that the benefit-cost balance of a shift to monetary union is much less favorable in Latin America and the Caribbean than in Europe and, most important, that the region is some distance away from satisfying the necessary conditions for monetary union. That leaves dollarization as a limited option for small countries and floating rates combined with inflation targeting for much of the rest.

The world is in a state of flux regarding the choice of monetary and exchange-rate regimes. One option is giving up national currencies to join a monetary union. Since Mundell (1961), the literature has emphasized conventional optimum currency area (OCA) criteria in shaping this decision. European Monetary Union (EMU), the largest historical experiment in giving up sovereignty in monetary (and other) policy areas, has captured the imagination of policy makers and researchers alike. It has also brought other issues related to complementary areas of reform and integration to the forefront of theory and policy analysis. These issues shape the discussion about monetary union and, more generally, about optimal regime choice for countries in other regions, including Latin America and the Caribbean (LAC). The purpose of this paper is to assess the long-run sustainability of monetary unions, in the light of theory and of the experience of EMU, and to draw lessons for regime choice, and monetary union in particular, for LAC. In Section 2, we briefly review recent global trends in exchange-rate regimes and discuss the benefits and costs of EMU. This leads to three issues crucial to the long-run sustainability of monetary union, namely, fiscal policy, labor market rigidities, and financial market integration (Section 3). These considerations provide insights in Section 4 into the forces that shape monetary and regime choice in LAC and Section 5 concludes.

This paper started by documenting the worldwide shift away from intermediate exchange-rate regimes toward either of two corners: floating exchange rates or currency union/dollarization. In LAC, unilateral dollarization was adopted in order to control adverse macroeconomic conditions (as in Ecuador) or in response to longer-term optimality considerations based on OCA criteria (as in El Salvador). At the other extreme, adoption of a floating exchange rate cum inflation targeting can be a response to a crisis situation (as in Brazil) or the gradual evolution toward more flexibility and monetary policy independence (as in Chile). The available evidence on the costs and benefits of abandoning national currencies suggests significantly less favorable conditions in LAC than in Europe. Low intra-regional trade, idiosyncratic shocks, differences in policies and institutions, and heterogeneity in economic development militate against monetary union in the region generally and in the existing trade areas as well. Currency union among the members of Mercosur remains a distant dream. Currency union in NAFTA faces considerable political hurdles. Overall, LAC is some distance away from satisfying the necessary conditions and shows little political will for monetary union. Our review of European economic and monetary union leads to the following conclusions. First, while fiscal rules are necessary in monetary union, the SGP is sufficient but not necessary. Second, it is not so much cross-border labor mobility that is important for a smooth functioning of monetary union as real-wage flexibility and structural adjustment. Dollarization seems to be more feasible for smaller LAC economies that are highly correlated and integrated with the U.S. or are pushed to abandon their national currencies because of domestic crises. However, for most medium-sized and large economies, neither intra-regional monetary union nor dollarization appear to dominate the option of strengthening national currencies by means of floating rates and inflation targeting. Indeed, if countries manage in this way to lock in macroeconomic stability and to establish market flexibility, they may be on the best course yet toward intra-regional monetary union in the long run.