EurActiv is an extremely useful source of information and analysis (much better eg that EU Observer or Eupolitix, for example). Today they have an interesting survey of the recent debate about the efficacy of the euro. They also have a link to a recent report which seems interesting.

“The rejection of the Constitution by two of the EU’s founding members – France and the Netherlands – has raised concerns about the long-term future of European Monetary Union. But other comments have also led to some extra market volatility for the single currency. Arguably, French and Dutch voters did, in 48 hours, what the European Central Bank has been trying to do for six months – namely reduce the value of the euro.”

Martin Wolf is at it again.

“Which part of the word “no” do Gerhard Schr?der, Germany’s chancellor, and Jacques Chirac, the French president, fail to understand? France and the Netherlands have rejected the constitutional treaty: it is dead. But the rejection of the treaty by two of the original six members raises profound questions about the future of Europe and, above all, about the monetary union. A rising tide of integrationist ambition swept the single currency on to the European shore in the 1990s. Now, it is in danger of becoming a beached whale.

Economists argue about the necessary and sufficient conditions for a successful single currency. But the majority would agree that it helps if the area in question is subject to common shocks, markets for goods, services, capital and labour are flexible, the overall economy is dynamic and, not least, there is a shared identity embedded in common political institutions. Not one of these conditions is either necessary or sufficient. But the absence of all four creates a huge challenge. Yet this is precisely where the eurozone now finds itself: economies have diverged; growth is disappointing; markets are proving dysfunctional; and the movement towards further political integration is now in peril.”

The Economist, which curiously enough seems to have suddenly abandoned its PPV Global Agenda policy (something wasn’t working) says similar things here.

And a simple graphical illustration of why one size doesn’t fit can also be found here.

Economics Commissioner Joaquim Almunia presented a report to the Commission in Strasbourg yesterday. (The report is here: pdf). Essentially Almunia argued that Italy’s deficit at 106% of GDP was way above the target 60% set by the new version SGP. He also argued that it was neither temporary, nor the product of exceptional circumstances (the two other criteria). The document will now go the rounds for two weeks of ‘technical consultation’ before a final decision is taken at the next Ecofin meeting.

“The Italian economy minister, Domenico Siniscalco, signalled a fight against the commission, saying he disputed its assessment and would seek support among finance ministers this weekend.”

The euro fell to a seven-month low against the dollar early this afternoon, touching $1.2479 – well below the $1.2575 it bought in New York late Friday. The is a change of about a cent in a day. It is too early yet to draw any further conclusions.

Brad Delong has a post on the Euro, and Dave at Macroblog has a couple of relevant posts (and here) . In particular he has an extended extract from the Martin Wolfe article on the Euro and Italy, plus he reproduces a useful graphic showing how ‘sovereign spreads’ in Italy Greece and Portugal declined dramatically with entry in EMU.