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Pressure from the Dollar. For all the caution, there is, as French Foreign Minister Maurice Schumann commented, "a strong incentive built into the plan to move forward." Indeed so. The Europeans were propelled into unexpectedly early accord by the profligacy of the U.S. For most of two decades. European nations have been accumulating dollars at a rising rate as a result of U.S. balance of payments deficits. Common Market countries complain that the flow of dollars affects interest rates, finances the takeover of European firms by U.S. companies and promotes inflation on the Continent, since central banks have to issue their own currencies to buy up excess dollars in the marketplace. Singly, European nations have little defense against the flood. Any country that raises the value of its own currency in relation to the dollar would in effect be raising the price of the goods it sells to its trading partners.
"Our actions have had a disrupting effect on the international financial markets," explains Yale Professor Robert Triffin, a leading monetary authority and member of TIME'S Board of Economists. "The Common Market countries realized that by refusing to act together they have lost monetary sovereignty to the U.S. To recover some degree of control, they had to act jointly."
A European currency would rival the U.S. dollar as a medium of international exchange. By acting in concert, the Common Market countries could raise the value of their currencies, in effect devaluing the dollar. Washington would welcome that event, since effective devaluation would make American goods more competitive abroad. But should the Europeans, with their new-found unity, decide to limit the amount of dollars they accept, the consequences could be quite painful for the U.S.