Following his embarrassing brush with U.S. CEO Maurice Taylor, French Industry Minister Arnaud Montebourg has turned to the devaluation of the euro as a means of saving France's battered economy.
“France's industry minister Tuesday called for a lower euro and said the European Central Bank's [ECB] role should be reinterpreted, wading back into a currency debate that had been calmed by an agreement between the world's top finance ministers earlier in the month to refrain from competitive devaluations of their currencies,” the Wall Street Journal reports.
"I am for a less-strong euro," Montebourg said Tuesday, adding that it is "good news" the euro has declined against other currencies.
As noted in the WSJ report, the euro has fallen about 4.6 percent against the U.S. dollar since February:
The report continues:
Earlier this year, French officials complained about the euro being too strong and making the country's exports less competitive. In a speech to the EU parliament in early February, French President Francois Hollande said the euro shouldn't be left to fluctuate according to the mood of the markets and warned that a strong euro wipes out efforts to make economies more competitive.
However, later in February, finance ministers and central bankers from the Group of 20 industrial and emerging countries agreed they would refrain from competitive devaluation and would not target exchange rates for competitive purposes. That commitment has reduced the number of comments from European politicians on the euro and the ECB.
Still, the industry minister also said Tuesday the role of the European Central Bank should be reinterpreted. The Frankfurt based institution's primary mandate is to fight inflation, but Mr. Montebourg said that within the current European treaties the ECB can be more pragmatic and less dogmatic. It should act more like other major central banks, which Mr. Montebourg said had monetized debt.
"There are efforts to be made to bring order to public finances, but thinking that the entire effort should come from taxes and spending cuts is excessive," Montebourg said.
"We should share part of the effort with the monetization of debt, which is natural because it is directly linked to the errors of the banking industry which the central bank did not sufficiently monitor in the past," he added.
Final Thought: So this is Montebourg’s solution for repairing the French economy?
Seriously, has union protectionism really gotten to the point where an Industry Minister is more willing to call for the devaluation of his own currency than a review of the type of contracts that made a deal with Maurice Taylor impossible?
Wait, don’t answer that.
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