"France will propose the reform of the international monetary system during its presidency of the G8 and G20 in 2011." Nicolás Sarkozy, President of France, taking a position at the 40th edition of the World Economic Forum (WEF).
"An honest monetary system would free ordinary man from the" levers "of money manipulators."
Benjamin Franklin.
Summary
In this research, the author develops two interesting current affairs such as the current situation, such as the European monetary system and the euro, thus, evidencing a clear and singular solvency and in the light of a comprehensive and systematic worldview; addressing its origins, foundations, objectives, behaviors, perspectives, projections and finally, outlining important aspects as a way to follow; more than achieving its mission.
Introduction
In this opportunity, we will have to develop interesting current issues such as conjuncture, that is, the European monetary system and the euro, I hope, not without first stating that its approach or construction will be supported or will be oriented to unravel, under a thoughtful analysis; its origins, foundations, objectives, behavior, perspectives, projections and finally, present our opinion in the form of a proposal for a course to follow, in order to generate, in turn, an ignition, passionate as a high debate that leads to the arrival of better ideas reasoned.
In this sense, it goes without saying that through this research we will try to answer the questions of rigor, for example: is the European monetary system the most important contribution to the financial estates of the world? Is it constituted in the more future? What possibilities does the euro have of gaining space to the United States dollar? Can the euro overcome its clamorous and unthinkable fall to become the common world currency? What policies should the States apply in order not to see their economies so affected as a consequence of the almost irrepressible Eurian depression?…, etc.
Let's move on, then, without further ado, immerse ourselves in these issues that are constituted, by the way, their effects are not only configured in the pending agenda to be faced by the European Union, if not, rather by the States of the world in their set.
Monetary system
In the first place, it is necessary to address the issue of the monetary system or monetary structure, in a broad or generic way, thus we have that it is constituted in a legally established system of monetary circulation in a country. It comprises: i) the merchandise, which performs the function of a general equivalent; ii) the monetary unit: the price pattern; iii) the legal means of circulation and the means of payment (metallic money, paper money, fiduciary money: banknotes); iv) the minting system for coins (full content: gold; subsidiaries - exchange currency - silver and copper); v) the type of issue of banknotes and government securities (paper money). The monetary system as the way in which the circulation of money is organized is not unique for all states.
The basis of the system is the commodity that performs the function of money: gold, silver or both metals at the same time. At first, the dominant monetary system was bimetallism with which silver and gold simultaneously fulfilled the function of measures of value. At the end of the 19th century, most countries adopted the monometallic system, based on gold. The minting of gold coins was free, as were the exchange of other monetary signs into gold coins and the movement of gold between countries.
Once created, the coins gave rise to a monetary system whose characteristics have remained, in essence, constant for millennia; one of the changes that has endured was the introduction, in the European coins of the seventeenth century, of the grooves in the edges in order to avoid that they were filed.
During the First World War, most of the capitalist countries adopted the paper money system with which gold fulfills the function of a measure of value, while the function of a means of circulation and payment is fulfilled by banknotes and banknotes. the value stocks, which are not changed by gold and therefore may lose value.
In the period of the general crisis of capitalism, there is an inflationary circulation of paper money in the countries of the bourgeois world. Under socialism, the monetary circulation constitutes a movement of money from a center - the State Bank - towards all the districts, companies and organizations of the country, and vice versa, which allows the issuing Bank to establish an operational regulation of the monetary circulation.
In the socialist countries, there is a state monopoly of foreign exchange, that is, the State has the exclusive right to carry out all operations with foreign currencies and other equivalent values, concentrating all monetary reserves in its hands.
The monetary system enhances its importance when it becomes international, because being international the currency behaves as: i) means of exchange in commercial exchangesand in capital movements. Private agents use an international currency as ii) vehicle, that is, as an exchange intermediary between two second-rank currencies. Ex: Transactions between Brazil and Thailand are divided into two moments: real / dollar and dollar / baht. The monetary authorities use international currencies as iii) means of payment in their interventions in the exchange markets. An international currency serves as iv) unit of account for private agents in billing their international commercial or financial transactions. This function is different from that of means of payment insofar as a transaction can be denominated in one currency and then paid in another (distinction between billing currency and means of payment).The monetary authorities make use of the unit of account function in the implementation of their exchange policies when they decide to anchor their currencies to an international currency v) of reference. Finally, as vi) reserve of value, an international currency is used by private agents in order to preserve the value of their assets. The monetary authorities manage the composition of theirinternational reserves based on both its objectives to optimize the risk / return ratio and the nature of its interventions in the foreign exchange market.
Thus, among the conditions for the internationalization of a currency, we can refer to: i) Stability - predictability of the currency, ii) Acceptability - liquidity, to be international a currency must be universally accepted; the currency must be “vehicular” in the sense that it is used by other countries, in transactions that do not imply a direct relationship with the issuing country, iii) Weight of the issuing country in international trade: it must be important, which reinforces the use of this currency by other countries, iv) Freedom of financial markets of the issuing country: it must be broad and deep, guaranteeing the condition of liquidity and thus allowing its currency to play a role of reserve of value for private and public actors.
European Monetary System (EMS)
Secondly, we will specifically cover the issue of the European monetary system, whose nature is consistent with the organization or systematization of the circulation of a common currency unit to the member countries of the European Union, the same one that presents as the central axis of its implementation and validity.
This system aimed to facilitate financial cooperation and monetary stability in the European Union. In this sense, its objective is: to stabilize the exchange relations between currencies in order to guarantee the proper functioning of the Common Market, and thereby contribute to investor confidence.
Thus, we have that it came into force in March 1979 in response to the alterations caused in the European economies by the fluctuation of exchange rates in the oil crises and the collapse of the Bretton Woods agreements in the 1970s.
It should be noted that said system presented a triple objective, that is: i) Achieve economic stability, ii) Overcome the repercussions of the interdependence of the EU economies, iii) Help the long-term process of monetary integration European.
On the other hand, it is essential to point out that the central component of the EMS is the exchange rate mechanism (ERM), that is, a voluntary system of semi-fixed exchange rates, based on the European monetary unit (ECU), adopted In the creation of the SME and based on a qualified valuation of the currencies of the member states, Under the MTC, the participating currencies are allowed to fluctuate in relation to each other and the ECU only within a fixed range of values.
Historically, European monetary integration has been a matter for central bankers rather than officials of the Ministries of the Economy, and this has been reflected in the relationships between the different institutions.
In this sense, it should be noted that the General Directorate of Economic and Financial Affairs (DG II), in those years the Praetorian Guard of, at that time, President Delors, carried out a discreet and quiet work, but effectively helped the Central Banks could advance in the monetary construction of Europe.
The theoretical basis of SME is the ECU (European Currency Unit). The ECU is the unit of account for all purposes of the EMS, and in that character lies one of the great differences with the monetary snake, which fluctuated with reference to the dollar. In this way, the ECU ushered in European independence against the dollar.
The euro
At this point we consider it appropriate to start by mentioning the transition towards the adoption of said currency as the only one.
Consequently, it is necessary to record that of the models presented for the change to the single currency, two positions were fundamentally chosen: the economist, supported mainly by Germany, which considered that before the change to the single currency an economic harmonization was necessary and legislative between Member States (slow march); and the monetarist, supported by France, which advocated a quick step towards the single currency, through the creation of a monetary institution that would establish the economic criteria that the member states should follow.
The model sanctioned in Maastricht is close to the economic position. The European Union Treaty articulates the transition in three stages:
i) On July 1, 1990, by agreement of the Madrid Council, a phase of consolidation of the internal market began. Member States had to take the necessary decisions to achieve the free movement of people, goods, services and capital. Full completion of the internal market. Preparation of convergence plans.
ii) On January 1, 1994, the second stage begins with the implementation of the legal and institutional reforms necessary for the configuration of the Economic and Monetary Union: prohibition of privileged financing of the public sectors, avoidance of excessive public deficits, creation of the European Monetary Institute, of a European System of Central Banks (ESCB) and of a European Central Bank (ECB).
iii) The third stage begins on January 1, 1999. At this stage, the exchange rates at which the euro replaces national currencies are irrevocably fixed and the ESCB and the ECB fully exercise their functions.
In this sense, on January 1, 1999, the euro became the new currency of 11 Member States and a new single monetary policy was introduced under the authority of the ECB, beginning the third and final stage of Monetary Union.
Legally, participating national currencies cease to exist and become "non-decimal subdivisions" of the euro.
The financial markets of the euro area change to the euro, including foreign exchange, bond and equity markets.
The three-year period of introduction of euro notes and coins begins, with the principle of "no compulsion, no prohibition" which means that individuals and companies are free to carry out transactions in euros, but are not obliged to do so.
On June 20, 2000, the Decision on the inclusion of Greece in the euro area was drawn up, ergo: The summit of Heads of State and Government at the Feira European Council decided that Greece had fulfilled the convergence criteria and that it would join the euro since January 2001. The conversion rate of the Greek drama to the euro was also announced.
On September 28, 2000, the Danish referendum rejects inclusion in the euro area, as follows: The Danes vote no to the adoption of the euro in a national referendum on membership of the single currency. • September 2001: Pre-circulation and distribution of euro notes and coins. Although not yet legally in circulation, the first euro notes and coins are distributed to banks and post offices.
On January 1, 2002, the euro banknotes and coins enter into circulation, in that order of ideas, around 7.80 million euro banknotes and 40,000 million coins, approximately € 144,000 million, are put into circulation by the central banks of the 12 eurozone countries.
February 28, 2002: withdrawal of national currency. The definitive date for the end of the legal status of national currencies during the exchange period (depending on the calendars of the national exchange plans), means the definitive withdrawal from circulation of national currencies.
On September 14, 2003, the referendum on Sweden's membership of the euro zone takes place.
Sweden votes against joining the euro zone, consequently, we have that, the third stage begins on January 1, 1999. At this stage, the exchange rates at which the euro replaces national currencies are irrevocably fixed and exercise the ESCB and the ECB fully function.
However, it is necessary to address the issue of enlargement or extension of the euro zone, and in that sense, we have that, On January 1, 2004, 10 new member states join the euro zone (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia).
Bulgaria and Romania join the EU on January 1, 2007. The eventual adoption of a single currency is part of one of the requirements established in the Treaty.
These countries, however, will introduce the euro as soon as they have fulfilled the necessary conditions (especially the Maastricht convergence criteria) as established in article 122.2 of the Treaty on the European Community.
Slovenia was the first Member State to become one of the newly acceded countries in 2004, which fulfilled all the convergence criteria and was therefore entitled to adopt the euro. The banknotes and coins entered into circulation in Slovenia on January 1, 2007.
On January 1, 2009, Slovakia, the second country of the last twelve countries that joined the European Union, exchanged its national currency for the euro, adding 16 countries to the euro zone.
Carrying out a recount of the most remarkable points mentioned with respect to the euro, we can affirm that since 1 January 2002, more than 300 million European citizens use the euro in their daily lives. Only 10 years have elapsed between the Maastricht Treaty signed in February 1992, which irrevocably established the principle of a single European currency, and the circulation of coins and banknotes in twelve countries of the Union, an extraordinarily short period of time to carry out an operation. unique in world monetary history.
The euro, which has come to replace currencies that had been the symbols and instruments of their national sovereignty for European countries, has considerably promoted the economic unification of Europe, while representing a factor of approximation and identification of European citizens, who From now on, they can travel throughout the entire Union without changing currencies.
The adoption of the euro will mean that the States transfer to the ECB their powers in matters of monetary policy, which will be unique. This means that interest rates and the issuance of banknotes will be controlled from Frankfurt.
The Treaty on the European Union (TEU) regulates the exercise of economic and monetary policy that will govern all States, which have established a pact of stability and budgetary and financial discipline to be observed since the adoption of the single currency..
Behavior of the euro
According to the "Introduction: Impact of the euro on the world monetary and financial system: A synthesis", published by the Spanish newspaper El País on 04/30/1998 (it already warned that everything was not necessarily going to be as thought, that is, that the euro was going to solve everything), thus we have: i) the international monetary system is dominated by the US dollar, ii) the introduction of the euro into the international monetary system will not necessarily mean greater stability in exchange rate fluctuations or in the general behavior of capital flows in other regions, iii) the establishment of a single European currency will introduce greater stability in intra-European exchange movements, as 11 countries remain linked to a single exchange rate (that of the Euro) against the dollar, iv) from the first months of 1999,The Euro will correspond to 30 to 35% of the loans contracted worldwide, due to the gravitation of the 11 participating currencies, v) The Eurobond market and the equity market will rival the United States, reducing capital costs and increasing the efficiency in its placement, vi) the strength of the Euro will increase the purchasing power of the European countries that adopt that currency, benefiting its importers, vii) it is difficult to affirm that the Euro will appreciate or depreciate against the dollar, vii) The costs of financial transactions that currently arise from the existence of various exchange rates between European countries will decrease considerably, facilitating commercial operations with the European Union and between the countries that comprise it.
On the other hand, turning the rudder a little, it is necessary to point out what refers to the evolution of the euro exchange rate, we have that: On its first day on the Frankfurt Stock Exchange, on January 4, 1999, the euro began to trade at $ 1.1789. Since that day, the euro has devalued, falling below the euro-dollar parity just one year later and continuing its decline until October 26, 2000, when the new currency reached its all-time low of $ 0.8225. Throughout that year the average exchange rate was $ 0.95.
The euro did not rebound until the introduction of the cash currency in 2002, rising from $ 0.90 to $ 1.02 at the end of 2002. A year later it reached $ 1.24.
In November 2004 it surpassed the barrier of $ 1.30 and on December 30, 2004 it reached its all-time high of $ 1.3668.
Throughout 2005 the euro fell to $ 1.18 in December and later, in November, below its starting price.
In 2006 the euro rose between $ 1.1813 on January 2 and $ 1.2958 on June 5. At the end of the year, the currency reached its all-time high after easily breaking the 1.30 barrier, it seems to stay there.
Boom
On the subject of important transformations that favored the rise of the euro, we can mention: i) Development of electronic intermediation systems: 99% of interbank business is carried out electronically, ii) concentration in the banking sector: Reduction in the number of participants in markets, iii) effect of the disappearance of the currencies of the euro zone countries: reduction in the volume of transactions, iv) decrease in intra-European country risk.
However, it should be noted that said boom will be subject to the provision of so-called factors for the use of the euro as a means of payment / vehicle currency, and that within which we can mention: i) Lower transaction costs, this is, in markets where the euro is used as a means of payment / vehicle currency, ii) lower risk of exchange of instruments denominated in euros in the single exchange market of the euro zone, iii) better conditions of the operators of the euro zone, since to demand that the European currency be used in its international transactions. European exporters prefer their local currency, as the payment and billing currency compared to third countries, iv) currency strength,because it generates emerging and transition countries encouraged to use the euro to denominate and pay for their imports to balance their global exchange rate risk. As they gain confidence in the euro, they turn to it as a vehicle currency.
Crisis
Regarding the factors of the crisis or the fall of the euro, we can refer to: i) That it begins with a crisis in Greece and extends with a crisis in other European countries, ii) A sustained drop in the exchange rate of the euro against the dollar for more than 12 months and has not stopped, iii) low demand for the euro in the capital market, iv) unsynchronized interest rate policies of the United States and the European Union exacerbate the devaluation of the euro, v) the market judges that the European Central Bank will not increase soon the interest rate and will postpone structural measures to face crisis, vi) ambiguous attitude of European authorities.
International implications
We point out that the crisis: i) has polarized positions and raised doubts about its viability, ii) the flow to leave the euro zone is growing in several countries, iii) international perspectives of stagnation, iv) migration of international reserves to other currencies, v) possible social and political repercussions inside and outside Europe, vi) it is urgent to take structural measures to combat crises.
Precisely, the last point that deals with the urgent measures to be carried out to counteract the euro crisis, we have: i) Reduction of imbalances, ii) austerity and savings, iii) reduction of public investment, iv) liberalization of the labor market, v) reduction in public spending (reduction of public salaries and new hires), vi) depreciation of the euro, vii) increase in taxes, viii) promotion of exports, ix) economic aid (rescue), x) recovery of competitiveness.
As noted, the rescue of Greece is inevitable. And it is so for several reasons: i) because the breakdown of the euro would be much worse for all its members than having to bear the cost of the bailout (think that there is no procedure for a country to leave the euro and, if it did, also had to leave the EU itself, it would create an unprecedented institutional crisis); ii) because the cost of the rescue is relatively small given the weight of the Greek economy in the euro zone; and iii) because a large part of the Greek debt is in the hands of European banks (especially German) which, if they suffered losses due to the Greek default, could go bankrupt and would in turn have to be rescued by their governments, which could truncate the incipient recovery.
For all these reasons, Europe - promoted in this case by Angela Merkel and Nicolas Sarkozy, with the authority granted to them to be at the head of their respective countries and without formally exercising the institutional leadership of any of the Union's institutions - have decided to assume the challenge and rescue the Greek economy. If the markets do not want to buy the Greek debt, certain European governments will come to the rescue and avoid, by the way, the IMF alternative that is, instead, preferred by members with their own currency such as the United Kingdom and Sweden.
It is true that the Treaty on the Functioning of the EU includes Article 122.2, known as the no bail-out clause that prohibits financial bailouts both by the ECB and by the Union (such bailouts are allowed only in cases of exceptional events that they escape the control of governments, and it is obvious that a budget indiscipline that lasts more than 10 years is not exceptional or beyond the control of the government). Furthermore, the bailout raises a moral hazard problem that the ECB has fought so hard against: if Greece is bailed out, won't there be an incentive for other countries (or Greece itself) to behave fiscally irresponsible in the future? However, for the reasons stated above,the no bail-out clause is not very credible because it is in the interest of the euro zone countries themselves to rescue their neighbor in trouble, which will lead them to circumvent the legal impediments to find a legally valid way to do so.
Thus, rather than direct financial assistance from the Commission, it seems that it will be chosen - if in the end Greece really needs it, since the mere announcement of the determination to bail out may be enough - for bilateral aid between States that includes loans to which a harsh conditionality is associated, or the German guarantee of new Greek debt issues or the purchase of Greek debt by other countries. The possibility of creating a new European Monetary Fund has even been raised, although the initiative does not appear to be materializing. Once the solution had been agreed by France and Germany, the strategy was outlined by the 16 countries of the Eurogroup - chaired by Jean-Claude Juncker from Luxembourg -, obtained the approval of the Commission and the ECB,and it was only raised at the last minute to 27 to bolster political support. But Germany has made it clear that European solidarity will not rid the sinful Athens of a penance of long austerity in public spending and structural reforms, since the conditions of the aid will not be much more generous than those that a possible intervention would stipulate. of the IMF and, of course, it is no longer possible to get rid of the damage that the crisis has caused to its credibility as a country.It is no longer possible to get rid of the damage that the crisis has caused to its credibility as a country.It is no longer possible to get rid of the damage that the crisis has caused to its credibility as a country.
To conclude
Regardless of the way in which the rescue of Greece finally materializes, this situation highlights some problems, both in the functioning and in the governance structure of the single currency, which will have to be addressed in the future.
On the one hand, once this first rescue occurs, it would be good if a protocol was established to regulate these types of situations in the event of their recurrence in the future. Such a protocol would reduce uncertainty (and with it volatility in the fixed income markets) and, far from showing that the governance of the euro area is deficient, it would show that the euro is a dynamic project, in continuous improvement and that it learns of the challenges you face. In fact, this protocol does not currently exist because when the euro was designed, the possibility that the worst crisis in 80 years would occur on the 10th anniversary of the single currency was not considered.
On the other hand, the Greek problem also shows that the Monetary Union would work better if the power of the Commission were strengthened both in terms of fiscal coordination between European countries and in the area of structural reforms. For example, if Greece (or also Spain and Italy) had made reforms to increase the competitiveness of their exports in recent years, they would now be in a much better situation. Likewise, if Germany had made a greater fiscal stimulus at the beginning of the crisis, or if there were institutional mechanisms at the European level to ensure that its domestic consumption was higher (and, therefore, its external surplus lower), countries like Greece,Spain and Portugal would have had higher external demand that would have prevented them from accumulating such high public deficits.
Some of these functional deficiencies are the well-known conditions necessary for the proper functioning of a monetary union. When Paul Krugman emphasizes that the euro has functional problems, he is referring to the fact that the euro countries should try to solve some of these challenges (which politically involve giving greater power to the Eurogroup and the Commission), not that the single currency is a failure or that its member states would be better off without it and should abandon it in order to devalue.
Although many of these reforms require a greater transfer of sovereignty functions to Brussels - something that at this moment it does not seem that the countries can assume -, it is also true that the new Treaty, combined with political will, can go a long way. In fact, Greece has been the first Member State to which Article 121 of the Treaty will apply, which states that the Commission may issue warnings to a State when “it is found that the economic policy of a Member State contradicts the general guidelines that endanger the functioning of the economic and monetary union ”. And the extraordinary European Council, for lack of precision, has closed with a short political statement that, however,It implies the will to better coordinate from now on the setting of economic policy objectives and to strengthen the monitoring of their fulfillment.
Doing the exercise of a perspective, we have that, the first 10 years of life of the euro were quiet. The important technical challenge of substituting national currencies for euros was exceeded in an outstanding way, the European Central Bank (ECB) quickly consolidated great credibility and, although the Stability and Growth Pact agreed in 1997 never managed to sanction the countries that incurred in excessive deficits, their relative weakness in disciplining national fiscal policies did not appear to pose major problems for the functioning of the euro zone.
Furthermore, given the outbreak of the US subprime crisis in mid-2007 and the global financial crisis in September 2008, the euro has been an umbrella of stability for almost all its member states.
Although the crisis revealed weaknesses in its governance structure, the very existence of the single currency was enough to prevent speculative attacks, competitive devaluations, protectionist escalations and diplomatic conflicts, which in the past had been the usual reactions of the European powers in the face of economic crises.
In fact, with the exception of the UK, all non-single currency members of the EU today are more interested in joining the euro than in the past. And even Iceland, one of the three western European countries that remained outside the EU, applied for membership in 2009, attracted precisely by the stability that the common currency could provide, after having suffered the collapse of its banking system.
However, when everything seemed to indicate that the European economies were beginning to leave the crisis behind, the possible default of Greece is putting the euro to the test.
Thus, given the spectacular increase in short-term investment positions that are betting on the depreciation of the single currency, its traditional detractors (especially in the US) have even affirmed that it can be broken. This analysis explains why this possibility is almost non-existent, analyzes the different alternatives that the EU and the euro zone are facing to rescue Greece and ventures some hypotheses on how the “Greek tragedy” may condition the future functioning of the euro zone.
Greece has systematically defaulted on its fiscal policy obligations as a member of the euro zone in recent years, incurring budget deficits so high that, at the beginning of 2010, a hypothesis of default on its debt is not implausible. Some EU Member States, moved by the real danger that this scenario could represent to private creditor banks –especially German and French-, by the more or less remote risk of contagion to other more important economies, or by an indeterminate sense of solidarity, they have launched a financial rescue operation to help Athens and safeguard the euro zone. The initiative was finally taken up by the 27, the Commission and the European Central Bank on the occasion of the extraordinary European Council held on February 11.Beyond the specificities of the Greek case, the episode could have important effects to strengthen the real coordination of national economic policies in the EU, in general, and in the euro area, in particular.
The euro, which has come to replace currencies that had been the symbols and instruments of their national sovereignty for European countries, has considerably promoted the economic unification of Europe, while representing a factor of approximation and identification of European citizens, who From now on, they can travel throughout the entire Union without changing currencies.
In any case, the Greek crisis opens the possibility for the euro countries to rethink how to make the great achievement that the single currency means can be improved. Maybe they will take this opportunity.
Consequently, we have to conclude that:
i) The creation of the EU and the introduction of the euro envisioned a horizon of stability and economic prosperity.
ii) Many economies turned to the euro as a refuge from a weak dollar.
iii) Strength of the euro increased its use to surpass the dollar.
iv) However, the deficient fiscal policy and the permissiveness of the European authorities have led to a deep crisis.
v) Eurozone countries threaten to withdraw from the system.
vi) The crisis threatens to spread to other economies.
vii) It is urgent to implement structural measures to avoid the collapse of the euro.
There is no doubt that the European Union is experiencing situations for which it was clearly not prepared and it is always a good time to reform what does not work. In this sense, we believe that in the end, the European Union will end up agreeing with Barack Obama's chief of staff, Rahm Emmanuel, when he pointed out that "a crisis is an opportunity that cannot be missed, never."
recommendations
We outline as such, the following:
i) Diversify holding of international reserves to currency portfolio.
ii) Take the opportunity to pay debt when the exchange rate favors.
iii) Strengthen the Peruvian economic system through fiscal discipline and balanced monetary policy.
iv) Promotion of competitiveness.
v) Promote savings and austerity policies.
vi) Investment in education.
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