The Economic and Monetary Union

David Vidican & Dora Dejeu

RISE-E, year 1

European Construction Course

Introduction
The Economic and Monetary Union (EMU) = group of policies aimed at converging the economies of members of the European Union in 3 stages allowing them to adopt the euro; Only the states the meet the Copenhagen criteria can join the EMU; All member states of the European Union are expected to join; The concept can be found from The League of Nations (Gustav Stresemann), The Schumann Plan, The Hague Conference, The Maastricht Treaty;

Aims of the EMU

To finalize the competition of the internal market by removing exchange rate fluctuations and the cost inherent in exchange transactions, as well as the costs of hedging against currency fluctuation risks; To ensure comparability of costs and prices within the Union, which helps consumers, stimulates intra-community trade and facilitates business; To reinforce Europes monetary stability and financial power by:
ending, by definition, any possibility of speculation between the Union currencies ensuring, through the economic dimension of the monetary union thus established that the new currency is largely invulnerable to international speculation enabling the euro to become a major reserve and payment currency

The EMU in 2011

The Hague Conference 1969

July 1969 - 76th session of the Council of the European Communities, the French government proposed for a new meeting by the end of the year, to talk about new ways of consolidating and enlarging the Community; The results analyzed on 11 December in Strasbourg by M. Rey, President of the Commission of the European Communities, in front of the European Parliament during the annual Joint Meeting between the Community institutions; M. Jean Rey talks about the goals achieved and comments on the aspects of the European policy which still needed to be worked upon; Important aspects of the Conference: a definitive financial arrangement for the common agricultural policy by the end of 1969, paving the way for the EEC, increasing and consolidating the European Parliament powers, creation of a European reserve fund, European Atomic Energy Community, a European university, reaffirming the commitment on the principle of enlarging the Community (Treaty of Rome).

Werner Report 1970

Presented a general picture of the EMU; Proposed that two new Community institutions should be created: a centre of decision-making for economic policy and a Community system for the central banks; The plan to attain EMU was in three stages, but it did not lay down a precise timetable for these different stages; Main elements:
reinforcement of procedures for consultation and policy co-ordination; further liberalization of intra-Community capital movements and steps towards an integrated European capital market; narrowing of exchange rate fluctuations between Community currencies (creation of the "snake");

European Monetary System 1979

In the 70s the Werner Plan did not take off due to numerous revisions and heavy criticism;
The next step in economic and monetary integration is made in the late 70s European Monetary System focusing only on exchange rates; Factors prohibiting the EMS:
Failure of the snake to incorporate itself in any Member State; Low enthusiasm for European Integration; Second oil crisis; Poor economic conditions; Change of leadership and of paradigm in some countries (UK, USA)

Conclusions
EMU went through 6 major stages in which the vision of EMU often was different from one period to the next; Actors pushing for it often included both Member States leaders, expert communities and the Commission. Also the direction was definitely not always towards more integration;

Successful integration plans were followed by periods in which the plan did not materialize, after which a much more modest concept of EMU was sought after.

Bibliography
Werner report, EMS and EMU: Problems and Prospects of European Monetary Cooperation by Matthias Kaelberer, Princeton University, Dpt. of Politics National Bank of Belgium working papers research series on the origins of the Franco-German EMU controversies Economic and Monetary Union Memo prepared for the State of the European Union Vol. 8 meetings by Amy Verdun The Process of European Integration from The Hague to Maastricht, 196992: An Irreversible Advance? by Michael J. Geary The Hague Summit reproduced from the Bulletin of the European Communities, No.1, 1970 Interim report on The establishment by stages of Economic and Monetary Union www.cvce.eu