The Euro From The “European Union’s Point of View”

4 Colum. J. Eur. L. 467 (1998)

Luc Véron. European Union Fellow, School of International Relations, University of Southern Californi.

As a starting point it is reasonable to assume that the European Monetary Union (EMU), in the form of a single currency, will occur, the debate over the “pros” and “cons” is over, the euro will start in time on January 1, 1999; and a vast majority of the Member States of the European Union will take part in the EMU. These assumptions have been confirmed by market expectations. The J.P.Morgan “EMU Calculator,” regularly updated on the Internet, shows market probabilities derived from actual prices of ten countries joining Germany in the monetary union in 1999. The probability, among the countries that have demonstrated a sound interest in participating, ranges from 93% for Italy to 100% for four countries, including France and Belgium. On September 13, 1997, the finance ministers of the EU Member States took decisive action. They decided that the conversion rates of the currencies taking part in the EMU will be fixed as soon as May 1998, at the same time as the decision on which countries will participate. This is significant because the EMU will be a dramatic institutional change. It will change the daily lives of several hundred million people. It will bring the most important change in the international monetary system since Bretton Woods.

This paper does not address the practical aspects of the introduction of the euro, nor the transitional issues of the EMU. It deals with the macroeconomic implications of the euro and revisits the economic debate over the EMU5 insofar as it tells a story about the EU. The paper adopts the “cultural and historical perspective” of the political economy. In doing so it will attempt to give the “European Union’s point of view.” The debates over the EMU have been somewhat misleading due to excessive polarization between those who present the EMU as pure politics on the one hand, and the economists, on the other hand, who discuss the EMU only in terms of economic rationality. As a consequence, several crucial points for the future of the EU are overlooked in those respective debates.