Kudos to Robert Rubin, the US Treasury Secretary, a man with the courage to say 'No'. European politicians have come back to one of their favourite themes, the idea that exchange rates between major currencies such as the US dollar, the yen and the euro should be managed to limit fluctuations between them. They named that idea The Snake back in the 1970s, but call it the ECU, the EMU or whatever is now fashionable, it has not changed much. What it comes down to is that most European politicians think it is a great idea to rig their currencies. Most recently it has been French President Jacques Chirac saying that greater co-operation is required between top powers to ensure currency stability, while his finance minister, Dominique Strauss-Kahn, wants an end to 'benign neglect' of major exchange rates. Mr Rubin is having none of it. On Thursday, he said that sound economic policies, not efforts to set up currency target zones, were the key to stabilising the foreign-exchange markets blamed for wreaking economic havoc around the world. 'We think the way you achieve stability is through fundamental economic policy,' he said. 'If, for example, right now all the major industrial economies had robust domestic demand-led growth, that would contribute to currency stability.' Right on, bro'. What is needed is to address the causes, not the symptoms. Until mid-1997, many Asian politicians would have sided with their French counterparts and pointed to their own seemingly good record of pinning currencies to the US dollar. Since then, they have been proved catastrophically wrong and have become wary of currency targets. The first chart shows the record of currency management for Asia outside of Japan and the mainland. It takes the US dollar against Asian currencies on a weighted index where December 30, 1988 equals 100. For almost 10 years, this index shows, exchange rate movement was within only a narrow band of 94 and 103, a seemingly perfect currency target zone. Then disaster. It could not be kept up in an increasingly overheated economic environment. Only Hong Kong has made it work by turning its currency into a US dollar in everything but name. The others were not willing to surrender the financial independence this entails. Nor will Europeans surrender it. They have not created the euro to make it a slave to the US dollar. The only difference is that Asian politicians have learned to their dismay what can come from establishing currency target zones. Europeans will do well not to bring the same fate on themselves. But the market is not entirely sure that they won't. As the second chart shows, the mighty euro, after the US dollar the world's second most important currency since it was introduced in January, has not fared all that well against the US dollar since its debut. The euro may do better if European politicians pay Mr Rubin some heed. Impose basic monetary and fiscal disciplines to keep an economy on track and its currency will be on track too.