Benefits of EMU will outweigh costs, says Professor Stephen F. Overturf

Whittier College News Release

For Immediate Release - April 30, 1998

Media Contact: Kristin Tranquada at (562) 907-4974

Reference: 97/98: 99


This Saturday, May 2, 11 countries will begin the process of voluntarily sacrificing some of their sovereignty as they work out the details of transition to the euro, the single currency of the coming European Monetary Union. Stephen F. Overturf, the Douglas W. Ferguson of Economics at Whittier College and author of two books on the EMU, says the coming of the euro means that the dollar is likely to lose some of its dominance in international economics.

"The euro could be another big boy on the block," says Overturf. "It may well be that this currency will begin to take the place of what the dollar does in financial centers. With a currency that covers such a large area of Europe about to be introduced, it will make sense for individuals, firms and governments to reassess the value of the dollar as the currency in which they keep reserves, assets, and issue debt."

On Saturday, heads of state will meet in Brussels to decide which states will be the first into monetary union, what exchange rates will constitute transition into the euro, and who will be the head of the new European Central Bank. The EMU is scheduled to begin January 1, 1999.

Overturf says the coming union means Americans will need to change their thinking about Europe. "Americans tend to think of Europe as individual countries, and don't really see that those countries increasingly will be speaking as a united entity. The political implication in a united Europe is that perhaps we won't always exactly have our own way. That may seem a little threatening to Americans, but I view it as positive."

The overall economic benefits of the EMU to the U.S., says Overturf, outweigh the costs. "It's true that some of the more traditional measures of gains, such as the elimination of foreign exchange transactions costs, are likely to be small. But these pale beside the advantage of solidifying the single market."

Located 18 miles east of Los Angeles, Whittier College is an independent, four-year college offering traditional liberal arts majors and strong pre-professional programs taught in the context of the liberal arts. Whittier Law School, which is accredited by the American Bar Association and the Association of American Law Schools, is located on a separate campus in Costa Mesa.


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