EMU in Perspective

"In the light of these developments, it is perhaps not surprising that the 'snake' was not very successful at maintaining exchange rate stability."

"The story of Europe's integration is littered with allusions to trains but a spacecraft is probably a more apt metaphor. At various critical stages, a new rocket has been fired that takes the vehicle into a new orbit."

"There were periodic money shortages, financial panics, and runs on banks."

"By joining a full monetary union, certain advantages are immediately gained. These are primarily as follows:"

"This complicated piece of analysis is crucial in understanding how different economies behave with respect to the exchange rate."

"The potential costs of joining monetary union?from each country giving up its own independent monetary policy?are now much lower, but have by no means disappeared. "

"This change in the nature of currency markets has the following implications for the theory of optimum currency areas:"

"The ECB [European Central Bank] operates along broadly similar lines to the Bundesbank."

"Europe's experience in the early 1990s, as a result of German re-unification, exemplifies what can happen in a currency area if one country experiences an asymmetrical shock."

"The fear emerged that once countries achieved the 3 per cent of GDP deficit required for entry their fiscal discipline would slip."

"A reasonably efficient labour market is crucial if monetary union is to succeed."