From the Eurozone to a multi-tier currency area

Phillip Inman (The Guardian) sent me following comment:

Hi Miguel, I read your last article and found myself in complete sympathy. I am interested in how Brussels could move to a two tier euro and the relationship between an “inner euro” and an outer euro. One of the problems I envisage relates to pride, as so much does in politics. By which I mean, how do you convince the periphery they have different economies rather than second class economies? Phillip

Here my answer:

Hi Phillip, Happy to hear that we coincide in our concerns about EMU and EU.  

The move to a multi-tier monetary area is extremely difficult but absolutely necessary. Almost as difficult as the creation of the eurozone. This is why Brussels must quietly advance technical studies about such transit and discuss such things as which countries could conform new “natural” monetary areas. A modified ERM could regulate the relations between such areas, with the ECB acting as a coordination agent (a Central Bank of Central Banks). 

But then comes the politics, as you point out. Politics, national interests and public perceptions will dominate the discussion, and this is why  I am not optimistic about the process of moving toward a multi-tier monetary area. Regrettably a new major crisis will likely be needed to unblock the political constraints. The big question is whether the explosion of the euro “ticking bomb” will reverse several decades of European integration efforts. ( By the way, don´t you think that a book with the title “The Euro Ticking Bomb and How to Defuse It” would be an editorial hit? )

All the best, Miguel