This equilibrium would, however, entail a risk of fragmentation of the international monetary system, and the transition towards it would pose several challenges to public authorities. Currency substitution would be one of them. The “stablecoinisation” would likely start in economies with stubbornly high inflation or weak institutions – Gresham’s law in reverse.
The funds provided under the package announced to stabilise the financial sector through these types of measure amount to 23% of the euro area’s GDP. The overall fiscal stimulus – through discretionary policy measures and the effect of automatic stabilisers – amounts to 3.6 percentage points of GDP for 2009 and 2010.