4 Colum. J. Eur. L. 249 (1998)
Roger J. Goebel. Professor and Director of the Center on European Union Law, Fordham School of Law.
No other issue is of greater importance to the European Union today than whether and how Economic and Monetary Union (EMU) will be attained. If EMU can be successfully achieved, not only will it produce substantial economic and monetary benefits, but its success will have great political and psychological significance. A strong EMU is apt to promote further efforts toward a federal union. Conversely, if EMU fails or if there are protracted delays in its attainment, if too many Member States remain permanently outside the monetary union, or if some states suffer serious economic and social disruption as a consequence of joining the monetary union, then such shortfalls will adversely affect the present level of political integration in the European Union.
The title of this article represents a pun, but a pun with a point that responds to the tensions between these dreams of EMU’s success and fears of its failure. The emu is a large Australian bird, but, like the better-known ostrich, the emu does not fly. However, it can run very fast. The point is, that during the early stages of planning for the EMU there were some very high-flying aspirations for what it might attain, and what its attainment might mean for the political future of the European Union. Since then, these aspirations have been considerably chilled by political and economic realities. Still, one can reasonably hope that when the EMU structure is in place, it, like the Australian emu, will run very fast-that, while it may not achieve the highest goals imagined by some proponents, the EMU will function well at a more modest but realistic level.
The goal of an Economic and Monetary Union, sometimes also called the European Monetary Union, has been a central preoccupation of the European Community for many years. In fact, the idea of substantial economic and monetary coordination dates to the origin of the Community, and a proposal for a monetary union was advanced as early as 1971. In its description of the current monetary union plan and progress toward its attainment, this Article will deal initially in Part I with the goals which have inspired the current efforts to attain EMU, namely the perceived benefits of an integrated Community monetary system regulated by a central bank system, together with a single Community currency, eliminating trans-border currency costs and promoting further market integration within the common market. Next, this Article will outline the historical development of EMU, describing in Part II the initial 1970 plans and the success of the 1979 European Monetary System. Part III continues this historical review with a sketch of the vital catalyst, the 1989 Delors Report, the succeeding Commission studies, and the work of the 1990-1991 Rome Intergovernmental Conference that prepared the text of the Treaty provisions on EMU. Also necessary to situate EMU in its historical context is Part IV which deals with the early progress toward free movement of capital, a goal now attained through a 1988 directive and EC Treaty Article 73, introduced in 1994. Free movement of capital is an essential pre-condition for EMU.
The core of this Article lies in Parts V and VI. Part V sets out the three stage approach to EMU, pragmatically gauged for progressive development, and describes in some detail the role, powers and structure of the European Central Bank and the European System of Central Banks. Part VI builds on this by reviewing a series of constitutional and legal issues concerning the Treaty structure, notably the need for independence of the central bank system, the “democratic deficit” represented by the meager role accorded to the European Parliament, the essential need for effective judicial review to achieve a “rule of law” for EMU, and the question whether the central bank system ought to work to achieve high employment in addition to trying to achieve its Treaty goal of price stability.
The final Parts of this Article move to the current scene. Part VII describes the second stage of progress toward EMU, 1994-1998, and the current role of the European Monetary Institute. This Part’s most important feature is its analysis of the complex monetary convergence criteria which Member States must satisfy in order to join in the third stage of EMU, and its evaluation of current progress of the states in that regard. Part VIII sets out the key policy decisions taken by the European Council in 1995-1997 to further the development of EMU, and describes some related legislative measures, notably the recent regulations that embody the “Stability and Growth Pact.” The final Part covers the plans and studies for the new single currency, the euro, and some essential legislation to enable its introduction.