European Monetary Union: Initial Situation, Alternatives, Prospects -- In the Light of Modern Institutional Economics

Abstract:     
This paper starts with a brief description of the situation before the establishment of the European Monetary Union (EMU), i.e., the problems of the European Monetary System (EMS) which was established in 1979 and was in need of repair. The paper then deals with the various possibilities of effecting such a repair. It argues that EMU was not the only and not the best choice. Then problems of the Maastricht Treaty are highlighted and the main themes in the Euro debate outlined. Following on from this, the paper deals with the prospects of EMU. Two contrapuntal views are presented: an optimistic and a pessimistic one. Actual developments will hopefully come closer to the optimistic than the pessimistic view.

Number of Pages in PDF File: 43

Keywords: exchange rate systems, optimal currency areas, currency reform, credible cimmitments, central bank policy, international agreements, European Union, Euro

JEL Classification: E4, E5

Accepted Paper Series