EMU: Why and How It Might Happen | Zendy

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EMU: Why and How It Might Happen

Author(s) -

Charles Wyplosz

Publication year - 1997

Publication title -

the journal of economic perspectives

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 9.614

H-Index - 196

eISSN - 1944-7965

pISSN - 0895-3309

DOI - 10.1257/jep.11.4.3

Subject(s) - economics , inflation (cosmology) , independence (probability theory) , single currency , currency , liberalization , economic union , capital (architecture) , currency union , countdown , international economics , monetary economics , institution , european monetary union , monetary policy , international trade , political science , market economy , statistics , mathematics , astronomy , physics , archaeology , theoretical physics , law , history

This paper reviews the history, economic rationale, and main components of the project of establishing a monetary union in Europe by 1999. The adoption of a single currency is shown to be the best available option following the liberalization of capital movements. Most of the institution's design (central bank independence and objective, fiscal restraints) reflect Germany's fears of inflation as it is asked to give up its currency. The fiscal restraints are excessive, however, and a source of contractionary bias. The paper also presents the timetable of the final countdown.

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