BEYOND EMU: THE PROBLEM OF SUSTAINABILITY

In: Economics & politics, Band 5, Heft 2, S. 187

Abstract

A COMMON CURRENCY, AS ENVISIONED IN THE MAASTRICHT TREATY, IS THOUGHT TO BE THE SUREST WAY TO "LOCK IN" COMMITMENTS TO MONETARY COOPERATION AMONG SOVEREIGN STATES. HOWEVER, HISTORICAL EVIDENCE SUGGESTS OTHERWISE. COMPARATIVE ANALYSIS OF SIX CURRENCY UNIONS DEMONSTRATES THAT, WHILE ECONOMIC AND ORGANIZATIONAL FACTORS ARE INFLUENTIAL IN DETERMINING THE SUSTAINABILITY OF MONETARY COOPERATION, INTERSTATE POLITICS IS MORE IMPORTANT. COMPLIANCE WITH COMMITMENTS IS GREATEST IN THE PRESENCE OF EITHER A LOCALLY DOMINANT STATE, WILLING AND ABLE TO USE ITS INFLUENCE TO SUSTAIN MONETARY COOPERATION, OR A BROAD NETWORK OF INSTITUTIONAL LINKAGES SUFFICIENT TO MAKE THE LOSS OF MONETARY AUTONOMY TOLERABLE TO EACH PARTNER.