4. The Economic and Monetary Union 4.1 INTRODUCTION The idea of a common currency is well rooted in the process of European economic integration. As early as 1970, in fact, two years after the creation of the European Customs Union, the Werner Report proposed to parallel the current construction of the single market with the creation of a single currency. The timing was not accidental. In Chapter 3 we have in fact analysed the progressive inability of the Bretton Woods system of exchange rates to maintain the European currencies anchored to the US dollar, and thus ﬁxed among themselves. Such instability of exchange rates within member countries, we have learned, seriously hampers the smooth working of the Customs Union and the single market, owing to the negative spillovers that might arise among countries. The initiative for a ‘European’ currency therefore originated in this context. However, the time not being ripe for such a step forward in the integration process, the idea was set aside, and the European Monetary System (EMS) was instead created in 1979 (see Chapter 3). In parallel with the entry into force of the Single European Act and the process of completion of the single market, the Commission nevertheless revamped the idea of a common currency. Capitalising on a series of debates on the issue among economists and politicians, the Hanover European Council of June 1988 decided in fact to entrust to a committee, chaired by the (newly reappointed) President of the European Commission, Jacques Delors, the...
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