Evolution and Prospects
Chapter 2: From Common Market to EMU: An Historical Perspective on European Economic and Monetary Integration
2.1 INTRODUCTION The roots of a European single currency and monetary union can be traced back to the start of the common market in 1958 and possibly further still to the creation of the Latin Monetary Union by Belgium, Italy, Switzerland, Bulgaria, and Greece 130 years ago.1 Since the establishment of the European Economic Community (EEC) in 1957, attempts at monetary integration and, ultimately monetary union, have tended to assume importance only as a result of financial crisis and becoming a vague objective as soon as the crisis recedes. In recent years, however, this search has assumed greater urgency for three main reasons. First, monetary union can be viewed as a response by European policy makers to the increases of intra-European trade which has meant that different currencies and fluctuating exchange rates have become an increasing nuisance. Since the [successful] implementation of the Single Market Programme this has become more evident. Second, politically, there was a continual search for increased stability and security in Europe, which crucially hinged on anchoring Germany within Europe. And third, many economic interest groups especially business interests perceived a single unified and integrated European economy as serving their interests (Pinder, 1996, p. 123). Economic union has followed a rather smoother transition path. Economic integration was used after the Second World War to realise political goals, chiefly to anchor West Germany within a Western European alliance. Under this scheme common governance was deemed to be the best structure; other structures such as intergovernmental cooperation were not...
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