> 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.
The flip side of the seignorage issue is that, in terms of sheer currency values owed by the rest of the planet to the three imperial power-centers (USA, Japan, EU), the EU is by far the biggest bank creditor of all; the euro is, in this sense, merely a way of locking in the returns on those investments, at terms favorable to rentiers (but less so for, say, South Korea). Interestingly, not just Germany, but also France, Italy and even Spain have issued a hell of a lot of debt to the world economy (Spanish banks have been buying up Latin American financial firms, for example).
One question for the list: does anyone know of a ready source for the net international investment positions of the world's major economies? The Fed flow of funds stats do a nice job outlining the US plunge into debtor doom, but I'd like to find out who the global creditors are, and how much they own. Does the Bundesbank/BoJ collect this sort of stuff?
-- Dennis