JV INTERVIEW WITH DR. JACOB FRENKEL
CHATHAM HOUSE - 4/24/06

Veon:
Is a global currency part of fixing global imbalances?

Frankel:
Not necessarily, not necessarily, because in many occasions you need to have the mechanisms that changes the relative value of currencies between nations in order to bring about positive adjustment. One of the debate today between China and US has to do with the value of currencies, as one of the mechanisms to bring about restoration of equilibrium. So if you have a single currency, you lose this mechanism so you better make sure you have other valves and other mechanisms to reconcile differences. That is why the Europeans have insisted to have convergence of their economies before the convergence of their currencies which proved to be a very successful operation.