Mark Atkinson
The Nobel Prize for Economics was awarded last week to Canadian-born Professor Robert Mundell whose work on the advantages of common currencies gave birth to the euro.
He believes sterling is doomed to extinction and predicts United Kingdom membership of the new currency zone will prove irresistible. In a world of volatile and highly mobile capital, Mundell correctly predicted that countries would band together to protect their economies from being destabilised by speculators.
His thinking on international economics in the early 1960s is credited with directly influencing the decision by the euro 11 to pool monetary sovereignty.
Mundell plays down his role in the development of the new monetary order. Asked if he was the father of the euro, he said: “That’s too strong. Maybe a godfather, one of several godfathers.”
Mundell, of Columbia University, New York, believes the euro has the potential to rival or even overtake the dollar as the world’s premier currency, rendering smaller currencies such as the pound “increasingly unnecessary”.
He predicted that the UK and three other European Union member states still outside the euro zone would join by 2002, followed by central European countries.
The citation from the Royal Swedish Academy of Sciences praised Mundell’s work as a “superb reminder of the significance of basic research”.
“The world has caught up with Mundell’s idea,” said Erling Norrby, the academy’s secretary general. “The world has changed and he foresaw this change.”
ENDS