Chapter 6: The future of the EMU, the euro, and international finance
6. The future of the EMU, the euro, and international ﬁnance Introduced by Richard Cooper RICHARD COOPER: First, is it the aim of Europe that the membership of the EU [European Union] and the membership of the EMU [European Monetary Union] should be identical? Is that an objective or not? If so, what are the principles that will govern the choice of an exchange rate for a new entrant? It seems to me that this is a very important point that we have not touched yet on. The second issue has to do with the role of the euro beyond Europe, beyond the EMU. There are aspirations within Europe of an international role for the euro. The ﬁrst question is why are there such aspirations? What steps need to be pursued in order to achieve that aspiration? What are some of the consequences of success in attaining a worldwide role, that is to say a role outside of Europe for the euro? The questions lead us into the topics this morning: the general role of international reserves, diversiﬁcation of portfolios to different international reserves, and so forth. So I invite a conversation to begin on those topics. Before I ﬁnish though, I want to say I was on the list as somebody who wanted to speak when we ran out of time yesterday. At your places, I’ve circulated a paper that I did for a conference sponsored by the Federal Reserve Bank of Boston, and it came out a...
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