Economic and political risks of European Monetary Union

As demonstrated by the last European Union summit meetings, the heads of government and of state of the EU's member states appear firmly intent on starting the planned monetary union on schedule on 1st January 1999. The statements they make, and also any pamphlets and advertisements published by their governments and the European Commission, tend to concentrate one-sidedly on the purported advantages of monetary union. Nevertheless, in most EU countries plans for monetary union are greeted with scepticism or disapproval by a large section of the general public. There are good reasons for this reaction because, as will be explained below, European Monetary Union is in fact associated with serious economic and political risks.     

The European Monetary Union

The final stage of the European Monetary Union (EMU) is approaching; the single currency goes into effect on January 1, 1999. The article discusses the far-reaching ramifications of the euro in the context of the international monetary system. Current challenges facing the implementation of the new currency are addressed such as unemployment, high budget deficits, and general skepticism both EU members and non-members have expressed. The argument is made that acceptance and widespread use of the single currency will provide a framework for a deeper economic and political integration across Europe. © 1998 John Wiley & Sons, Inc.     

Challenges facing European Monetary Union

Forum

Challenges facing European Monetary Union     

A currency board for European Monetary Union outsiders

It is becoming clear that strict interpretation of the Maastricht criteria and adherence to the 1.1.1999 as the starting date for EMU will lead to a two-speed monetary union with insiders and outsiders. In this case, the author proposes the introduction of a currency board for outsiders in order to ensure a minimum of convergence before these countries join EMU as well as to confront the danger that outsiders may become faced with longer term obstacles to membership. *** DIRECT SUPPORT *** A02GP105 00003     

The path to European Monetary Union

The planned broadening of the common internal market into an economic and monetary union as proposed in the Delors Plan means a significant qualitative leap in the process of European integration, which should ultimately lead to political union in Europe. Is this objective realistic? In what ways could it be achieved?     

Economic Policy within a European Monetary Union

A European Monetary Union (EMU) and the complete transfer of the responsibility for monetary policy to a European central bank are no longer utopian ideas, but a politically highly relevant possibility. The question how economic policy goals can be achieved within such a monetary union is therefore gaining in importance.     

The EMS crisis and the prospects for European Monetary Union

Interpretations of the causes and implications of the EMS crisis of mid-1993 vary considerably. The following article offers a critical analysis of the most common arguments and draws conclusions for future policy.     

The road to European Economic and Monetary Union

The debate on the concrete shape of the second stage of European economic and monetary union ist in full swing. What are the benefits that may be expected from EMU? What risks have to be avoided?     

The advantages of a small European Monetary Union

The question whether European Monetary Union should include all the EC countries from the start or should initially be limited to a few core countries is again being discussed more intensely. What advantages would a small EMU have from an economic point of view? Which countries should be its founder members?     

Effects of the European Monetary Union on High-Technology Exports

Journal of Industry, Competition and Trade - Our study estimates the effects of the European Monetary Union (EMU) on high-technology (HT) export and assesses the potential knowledge spillovers of...     

The first stage of European Economic and Monetary Union

After two false starts, the first stage of European Economic and Monetary Union began on 1st July 1990. The following two articles discuss the consequences that the inauguration of EMU will have for economic policy co-ordination in the European Community. The views stated here are only those of the author and can on no account be attributed to the Commission of the European Communities.     

Challenges on the way to stage three of European Monetary Union

While the Maastricht Treaty envisages a single European Currency as part of the Economic and Monetary Union, it contains no detailed instructions as to the practical arrangements for its introduction. Despite prolonged discussions and negotiations at various levels, no consensus has so far been achieved on the optimum changeover procedure. This article deals with some of the major challenges in this context.     

The political economy of climate policy-making in the European Union

The European Union's climate policy is characterized by uncoordinated measures taken at national level, and a preference for inefficient economic instruments. The vanguard role taken by the EU in international climate negotiations stands in contrast to the lack of action in meeting far-reaching emissions-reduction targets on a European level. The following article attempts to explain these shortcomings by using the instruments of the New Political Economy.     

Monetary Union Viability: A Criterion Proposal

We propose a model that represents the dynamic behaviour of a monetary union comprising two countries whose natural interest rates are initially unequal. This initial disparity and the subsequent application of a common monetary policy generate different national inflation rates and lead to losses of competitiveness, foreign deficits, and the indebtedness of one country with respect to the other. We propose as a viability criterion for the modelled monetary union a combination of non‐explosive foreign debt and the ability of the central bank to neutralize the contracting effects of taking on additional debt to avoid falling into a liquidity trap.