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The Economic Potential of a Larger Europe

The Economic Potential of a Larger Europe

Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald

The Economic Potential of a Larger Europe gives insights into past, present and future issues related to the ongoing EU enlargement process. Providing a unique forum for debate and a multiplicity of views and experiences from both high-profile academics and those who engage with enlargement on an implementation level, this book covers a wide range of topics that are key to a successful transition and integration process and thus to the provision of a prosperous growth environment within a larger Europe. Special attention is paid to monetary integration, notably entry into ERM II, on which representatives of the national central banks involved present their views.

Chapter 25: Is EMU a leading indicator for political union? A discussion of five theses

Fritz Breuss


25. Is EMU a leading indicator for political union? A discussion of five theses Fritz Breuss1 Generally, economic and monetary union (EMU) is seen as the endpoint of economic integration. However, in the case of the European Union, EMU implies an asymmetric economic policy-making architecture with a centralized monetary policy regime but decentralized economic (primarily fiscal) policies that remain the responsibility of the member states (see Breuss, 2002a). This requires a complex process of policy coordination. As the recent practice indicates this architecture has been fragile even in the context of the EU-15; it is therefore not farfetched to forecast that it will become even more unstable and complex in an enlarged EU (see Breuss et al., 2003). To sketch the problems connected with enlargement and EMU, I will discuss five theses in the following. 1. IS THE EMU PROJECT AN EXAMPLE OF A NEW ‘JEAN MONNET EFFECT’? At the onset, EMU was apparently seen as a project with a so-called ‘JeanMonnet effect’: instead of directly establishing a political union or even the United States of Europe, one hoped for its indirect enforcement through the euro. This, however, would imply that the constraints to coordinate economic policy broadly would induce an ever stronger centralization of economic policies in many areas. The short experience with EMU shows that apart from the centralized monetary policy, the economic policy areas have a long way to go towards a properly working European harmonization. Even the delineation of competences in the draft treaty establishing...

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