was one of the reasons why some countries wanted so much to have a single currency with germany and wanted a transfusion of credibility for their own economies. so the desire to free ride on the credibility of the former hegemon was a part of the very basic idea of some, monetary weaker, countries. we are so happy to have got rid of humiliating devaluations, but we have not offered any better adjustment mechanism instead. when market forces appear on a different front – say, the bond market – many in the eu want to destroy or bypass these forces again and not to adjust the economies that have imbalances. the funny thing is that many are happy that the supposed tragedy of devaluations is over, but what we are now requiring of the southern axis of the eurozone is a competitive devaluation. but in a harder - to - achieve form : a so - called internal devaluation. so we have got rid of the politically unpleasant adjustment mechanism and have very little instead. yes, the enlightened founding fathers ( such as otmar issing ) knew many of these things in advance and tried to minimize the free - riding by setting certain safeguards against it. despite that, i believe many must be bitterly disappointed or shocked that many of these good rules proved to be so time - inconsistent, or dynamically inconsistent. yes, many good rules have already been breached or are close to being breached ( some of the golden rules of european law, one should add ) : • the no bail - out clause • flirting with monetary financing of sovereign debts • consideration of something like potentially permanent public support for financial institutions operating on the single market i believe that these rules are especially dear to this audience. so one has to ask : what are the prospects of the project when to keep it going you need first to breach some fundamental rules that should have created a solid and long - lasting basis for it? it is by definition hard to enforce rules among sovereigns, even when those rules are more important than fiscal or monetary ones – look at the united nations, for instance. so the only thing that remains rather difficult to understand is the former hegemon ’ s efforts to resolve what is, for it, the awkward situation of non - compliance with and infringement of the rules of the club ( including its own infringements ) by creating new and ostensibly better rules for the same club with the same members. yes, otmar issing, for instance, rightly warns

my definition of a clear hegemon is : it should have the right to set the rules and to force others to behave accordingly, the right to enforce the rules. and it has to have the right even to breach the rules itself and still not allow the others to breach the very same rules. but this is not true for germany after the introduction of the euro. to put it simply, eurozone membership turned germany from a hegemon into just one important player in rule making and practical policy making. if i use a simple analogy from the world of motoring, in the german mark era germany controlled the steering wheel, pedals and gearstick of the monetary vehicle, whereas in the euro era – and especially since the crisis broke out – it has had a firm foot only on the brake. and only sometimes, one must add. why is that? well, in a euro - style monetary union, many important issues are put to a vote ( or complicated negotiations ), and votes and negotiations typically have different outcomes than dictates or decisions of a hegemon. if there had ever been a notion that the euro could be as depoliticised as the former mark, it simply had to fail. in reality it had to be more politicised by definition. the euro could not be a depoliticised german mark, because in many key decisions and respects it had to be a rather more politicised french franc, italian bis central bankers ’ speeches lira or spanish peseta. otherwise, it seems to me, it could not have come into being in the existing set - up in the first place. a bitter remark : allan meltzer once said the ecb ’ s biggest advantage over the us federal reserve system is that it doesn ’ t have a government standing against it. this, he believes, is the best safeguard of the ecb ’ s independence. but the opposite and rather bitter argument can also be made. the ecb at times has to stand against all 17 governments of the eurozone member states. i do not want to talk about nominal and real convergence, about rigidities, oca arguments etc. rather, let ’ s take one example. many complain that it is so hard to make real macroeconomic adjustments within the current eurozone, among its individual states. but if i understand monetary history correctly, the eurozone was created partly to make standard adjustments more complicated. the fear of constant “ humiliating devaluations ”