The Euro: A New Single Currency for Europe?

4 Colum. J. Eur. L. 219 (1998)

Leila Sadat Wexler. Professor of Law, Washington University in St. Louis.

When the Treaty on European Union (TEU or Maastricht Treaty) was signed at Maastricht on February 7, 1992, one of its most significant chapters was, of course, Title VI on economic and monetary policy. This Title added new Articles 102a through 109m to the Treaty Establishing the European Community (EC Treaty), and couched within these dense and often difficult to decipher provisions was nothing less than a revolution-the establishment of monetary union and the introduction of a single currency for the Member States of the European Union. Yet in the years following the TEU’s ratification, there seemed to be a tension between the mandatory language of the new treaty provisions and what appeared to be significant political obstacles to their implementation, at least if one believed the newspapers. But the politics notwithstanding, there remained the imperative of Article 109j(4): “If by the end of 1997 the date for the beginning of the third stage has not been set, the third stage shall start on I January 1999.” Given the EC Treaty’s command and the political landscape at the time, to this observer it seemed a foregone conclusion that, barring some major political catastrophe, monetary union would take place, at least among some of the Member States, and the euro, as it is now called, would come into existence. That is not to say that there were no counter indications, but particularly with the announcement by the Commission last summer that eleven countries appeared to qualify (who were willing and able to join), it almost seemed that the question mark could disappear from our symposium’s title.

However, even if the euro’s introduction were assured, difficulties remained concerning what consequences would flow from its establishment. For the lawyers, contracts would have to be rewritten and contingencies planned for by legislation or other means. Businessmen and bankers had strategic choices to make. More fundamentally, intriguing questions arose as to just how the various treaties would respond to the two-tiered Europe of “ins” and “outs,” in the words of George Bermann, which the politicians seemed about to establish (and now seem inclined to expand under the Amsterdam Treaty). Finally, what would be the practical, constitutional, and social effects accompanying the transfer of monetary and economic policy from the Member States to the Union? Answers to these questions required more than a careful reading of the EC Treaty. They required extrapolation from the EC Treaty’s provisions to imagine the reality of what was to come.

Thus it was that on October 30, 1997, law professors, economists, political scientists, EU representatives, cultural historians, professors of European language and culture, business people and simply those interested in the imaginative prospect of a single European currency came together at Washington University to discuss, debate, and explain. The first panel addressed the legal framework.2 It seemed logical to explore the law first-for the Community’s “integration through law” ideal has privileged the lawyers in this international arena more than in any other in the world. Indeed, the four papers, and the discussion which ensued, cogently and elegantly set forth a picture of European law, as well as private lawyering responses to that law, which is dynamic, creative and ever-reacting to the changes that Monetary Union will bring about.

At the same time, if the papers underline the power of law to effectuate social change, they also suggest that our belief in (and enthusiasm for) law must be tempered by practical, psychological and social considerations, including the finite capacity of legal instruments to respond to political and social pressures. More particularly, it is not clear how the Union will respond to the stress that the “enhanced cooperation” provisions of the Amsterdam Treaty and future enlargements will place on the already strained functioning of the EU’s complex treaty structure in certain key areas. As George Bermann and Joseph Weiler suggest, however, these challenges must be met and overcome if the Union is not to fall prey to a “simmering legitimacy crisis.

A second set of speakers debated, in often lively exchanges, how EMU would actually work. Their papers discuss how the European Central Bank would conduct monetary policy, their predictions for economic performance in Europe, and, perhaps most ambitiously, how the euro and the dollar would behave on foreign-exchange markets given the particular economic and political configurations likely to exist. These papers tantalize the reader with predictions about EMU’s likely impact in Europe and abroad, often attacking the conventional wisdom in innovative ways. They are required reading for understanding the complex economic reality that the EC Treaty provisions attempted to direct and bring about.

The cultural, historical and political implications of EMU were to some extent addressed by all the papers, and space does not permit a full exploration here of the many thoughtful remarks presented and discussed. Two points are worth making, however. First, as many of the papers either implicitly or explicitly note, once enshrined in the EC Treaty, the single currency project became an easy political target. Local politicians in Europe were quick to try to make political points by running “against the euro” in domestic elections. Indeed, many of Europe’s economic problems were (and are) blamed on the convergence criteria of Title VI rather than on poor domestic policy (the more likely source of the problem). Given this political reality, it is undeniable that monetary union and the single currency are a real test of the Member States’ commitment to r’Europe, although the euro’s adoption may not be the “choice between war and peace” that Helmut Kohl postulates on occasion. There is no doubt that the euro’s failure would jeopardize any continued construction of a United Europe. It would also be a major setback for what economic and political integration has already been achieved. So the stakes are high. Interestingly, none of the papers posit EMU’s total failure-perhaps failure is unmentionable because it is unthinkable.

Second, history reminds us that if the euro can date its official inception only from the ratification of the Maastricht Treaty in 1993, it nonetheless has a long and venerable pedigree.8 The current state of European economic integration is the result of competing impulses, alternately favoring and opposing European political union, that have their roots deep in Europe’s troubled past. Although these forces have compromised by establishing a union that is economic in nature and monetary in material form, we would be mistaken if we failed to recognize that the physical form is but a pragmatic cloak for an often utopic and idealistic vision of a united Europe. In a few years time, the coins in a “Eurocitizen’s” pocket will symbolize this compromise. At the same time, we are warned that the construction of Europe must not stop there. Now that EMU is within reach, the Communities must look beyond the alienating language of money and markets to the construction of a European Union that can win (or at least influence) not only the pocketbooks but the hearts of its citizens. As the drafters of the European Coal and Steel Community Treaty wrote in 1951: “mhe purpose of establishing an economic community, [is to create] the basis for a broader and deeper community among peoples long divided by bloody conflicts; and to lay the foundations for institutions which will give direction to a destiny henceforward shared.” I hope that the papers which follow, and the discussion they provoke, will contribute in some small way to the realization of these ideals.