"A fear has been that heavy obligations in one or more countries could weaken the overall value of the euro. The Italian debt alone is 28% of the total debt of all 11 candidate countries. Each country is responsible for its own obligations, but participants in the single currency will switch most of their public debt to euros Jan 1, instantly creating a bond market to rival that of the United States."
So although there will be an issue of whether the Italian government will weaken the euro, and whether the other states will let it, what is the point of having a major world currency if the other countries of the world cannot have the pleasure of subsidising your economy by lending you money free.
What strikes me is that the launch of the euro is not imperilled by this Italian question. Europe is expecting the benefits of becoming a major world currency. A new twist to the unequal exchange of value.
Newsweek 4 May 1998: "America may also lose part of the $10 billion to $13 billion it gets annually in 'seigniorage' - the use of dollars by foreigners in their own countries. That's like a free loan every year to Washington, which doesn't have to pay interest on the money."
Chris Burford
London.