Premium
The shaky legal foundations of European monetary union
Author(s) -
Howe Martin
Publication year - 1998
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/1468-0270.00089
Subject(s) - currency , state (computer science) , legal tender , power (physics) , business , economics , control (management) , law and economics , international economics , monetary economics , management , physics , algorithm , quantum mechanics , computer science
A paper currency is underpinned by the power of a state to define and control the issue of legal tender. In legal theory, EMU will centralise this power. But in practice, the legal structure might not be strong enough to enforce currency issue rules against a member state in conditions of crisis. Instability could result if investors move euro balances out of a state's banking system to avoid perceived risk.