A digital euro

Views From the Marsh - David Owen

One of our key themes running into EMU, was that the single currency would be a further spur to trade within the bloc, with the potential to fundamentally change the economic geography of Europe, such that over time it could come to look more like that of the US - where the production of individual goods and services is far more concentrated in specific regions of the country, enabling the US to benefit more from economies of scale.

At the time we produced a major report on the subject, attempting to identify the winners and losers of such trends across the European economy, by revealed comparative advantage evident from intra-regional trade flows.

As ever, the practice proved somewhat different, with the emergence of far more complex supply chains, which included rapidly growing trade links with countries like China and the location of key parts of, for example, automotive production in satellite economies inside the EU, but outside EMU.

There may be now more regional specialisation …