Making the European Monetary Union

By H. James. 2012

265 citations recorded by the source corpus.

Europe’s financial crisis cannot be blamed on the Euro, Harold James contends in this probing exploration of the whys, whens, whos, and what-ifs of European monetary union. The current crisis goes deeper, to a series of problems that were debated but not resolved at the time of the Euro’s invention. Since the 1960s, Europeans had been looking for a way to address two conundrums simultaneously: the dollar’s privileged position in the international monetary system, and Germany’s persistent current account surpluses in Europe. The Euro was created under a politically independent central bank to meet the primary goal of price stability. But while the monetary side of union was clearly conceived, other prerequisites of stability were beyond the reach of technocratic central bankers. Issues such as fiscal rules and Europe-wide banking supervision and regulation were thoroughly discussed during planning in the late 1980s and 1990s, but remained in the hands of member states. That omission proved to be a cause of crisis decades later. Here is an account that helps readers understand the European monetary crisis in depth, by tracing behind-the-scenes negotiations using an array of sources unavailable until now, notably from the European Community’s Committee of Central Bank Governors and the Delors Committee of 1988–89, which set out the plan for how Europe could reach its goal of monetary union. As this foundational study makes clear, it was the constant friction between politicians and technocrats that shaped the Euro. And, Euro or no Euro, this clash will continue into the future.

Subfields: Finance

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Citations in the corpus

A Tale of Two Decades: The Ecb's Monetary Policy at 20 (2019, background): “For a review of how the framework for the ECB took shape also in relation to various influences from pre-EMU experiences of individual national central banks, see James (2012), in particular Chapter 8 “Designing a Central Bank”.”
Redesigning EU fiscal rules: from rules to standards (2021, background): “…sovereign debt in one member country on other member countries, either through the spillovers of fiscal crises or through fiscal dominance of monetary policy, forcing the European Central Bank (ECB) to monetize and leading to inflation (Bini Smaghi, Padoa-Schioppa, and Papadia 1994; James 2012).”