In our view, both work strands should progress in parallel. Proposals for a two-tier euro have been made from time to time. At the same time, euroscepticism is on the rise, as evidenced by the growing support for political parties of the extreme right or by citizens distancing themselves from developments taking place in Brussels.
Regardless of the precise details of any particular framework, though, what is most important is for broadly good macroeconomic policy to be followed. At the moment, surely that involves emerging market countries playing their part in balancing global demand and supply, by responding to their own circumstances, so as to avoid prolonged and costly inflation.