Chapter 2: Before the Euro: The First Steps in the Process of Monetary Integration
2. Before the euro: the ﬁrst steps in the process of monetary integration INTRODUCTION 2.1 Although the euro – launched on 1 January 1999 – represents a new phase in European monetary cooperation, the economic and political ideas behind the single currency in Europe have a lengthy history. The Werner Report (1970),9 adopted by the then original six European Economic Community (EEC) members in 1971, and named after Pierre Werner, the president and ﬁnance minister of Luxembourg who led the group that produced it, outlined a strategy to achieve monetary integration in Europe either through a single currency or irrevocably locked separate national currencies by 1980 – two decades before the birth of the euro. Although monetary union did not occur then, an examination of the Werner Report, its subsequent derailment, and the course of monetary cooperation in Europe in the interval prior to the birth of the euro is still instructive. The purpose of the present chapter is to outline the somewhat halting process of monetary integration before the euro. 2.2 THE BARRE MEMORANDUM The economic rationale behind the Werner Report was to provide a monetary means to cement together the markets of the ‘Six’ participants in the customs union established by the Treaty of Rome (1957). Werner was itself the culmination of a series of reﬂections on the nature of the relationship between the development of a uniﬁed market in Europe and the kind of wider policy framework that would support such a market. The basic concern here...
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