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Le Pen's currency proposal not "credible", says Luxembourg finance minister
January 13, 2017 / 9:36 AM / 6 months ago

Le Pen's currency proposal not "credible", says Luxembourg finance minister

Luxembourg Finance Minister Pierre Gramegna looks on as he takes part in a plenary session during the Asian Financial Forum in Hong Kong, China January 18, 2016.Bobby Yip

HONG KONG (Reuters) - A proposal by France's National Front leader Marine Le Pen to ditch the euro and return to a national currency that would be part of a basket of European currencies with a system to manage exchange rate fluctuations is "not very credible", Luxembourg's finance minister said on Friday.

Speaking to Reuters during a visit to Hong Kong, Finance Minister Pierre Gramegna said the euro had been strengthened by a series of crises in the European Union, including the Greek sovereign debt crisis.

He said improving fiscal conditions among euro zone countries allowed for greater integration and public spending.

"I think the euro is strengthening permanently. That doesn't mean everything is perfect in the euro zone," Gramegna said.

"But I don't think it's a very credible alternative to revert to the currency baskets that we used to have before and that haven't worked," he added, commenting on the proposal by Le Pen to return to a system similar to the pre-euro era.

"I think that today the euro is more credible than it was at its inception, and certainly strengthened compared to the Greek crisis."

Le Pen, the far-right leader who hopes to be elected president of France in May, outlined her proposed alternative to the euro currency, which she has long said France should leave, in an interview with Reuters earlier this month.

Her comments evoked the era of the European Currency Unit (ECU) basket which was used as a unit of account by members of the bloc in the two decades leading up to the introduction of the single currency in 1999.

It existed in parallel with the European Exchange Rate Mechanism (ERM) which attempted to narrow fluctuations between the currencies of member states.

Gramegna said falling annual budget deficits and a decline in debt across Europe had given the bloc more room to increase public spending, bringing the EU more in line with the promised expansionist policies of U.S. President-elect Donald Trump.

"One still has to be careful, some countries have more room for manoeuvre than others," he said.

"I think we have suffered from a lack of investment in the European Union since the world financial crisis. Europe needs more high quality investment and to a certain extent this is similar to what President-elect Trump has said."

Some leading EU figures have called for London's euro-denominated trade clearing business to be relocated to a euro zone city following Britain's vote last year to quit the European Union. Britain is resisting those calls.

Gramegna said it was too early in the so-called Brexit discussions to focus on single issues, but added it was "counterintuitive" for euro-clearing to remain in London.

Reporting by Michelle Price and Lisa Jucca; Editing by Simon Cameron-Moore

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