The world's newest currency

Money ; Euro ; Euro-dollar market ; European Central Bank ; European currency unit ; European Monetary System (Organization) ; Monetary unions - European Union countries

"System, power, and European monetary integration"

[From the Introduction]. Theories of international relations and comparative politics characterize the movement within Western Europe toward monetary integration primarily in regional terms. The global context within which European monetary integration is taking place is viewed in this literature as having little influence or influence which is only episodic, momentary, or ancillary to other, more primary forces. Regional political integration, regional economic interdependence, sectoral interests within European countries, and strategies of national executives and central bankers are instead given primary emphasis. This article argues, by contrast, that the international system has provided strong incentives for and greatly affected European monetary integration. Changes in and unpredictability of international monetary policies of the United States, in particular, have pushed European governments toward regional monetary integration at several critical historical junctures. Indeed, all of the major successes in monetary integration were closely, and causally, associated with transatlantic monetary conflict and the decline or weakness of the international monetary regime

The long road to EMU: The Economic and Political Reasoning behind Maastricht

This paper aims to examine whether the economic and political reasoning behind Maastricht is consistent with earlier approaches to monetary integration. In doing so, it revisits the intellectual debate on monetary integration in Europe at different stages. It concludes that Economic and Monetary Union (EMU) as agreed at Maastricht reflected a compromise between two different but converging preferences, in the context of the experience of the European Monetary System (EMS) and other developments in national and European politics as well as in economic thought, on the role of monetary policy and institutions; the fall of the Berlin Wall may have added a new political dimension that might have made it easier to agree on the blueprint and on the calendar for the realisation of EMU. The various (political and economic) motivations for the convergence of initially different views on the role of monetary policy and successive interpretations of the objectives of EMU are discussed within the wider context of the process of European integration.Economic and Monetary Union; Bretton Woods; European integration; Werner plan; European Monetary System; inflation; convergence of preferences; epistemic communities; currency crisis; monetary sovereignty; Maastricht treaty; convergence requirements.

The European system of central banks

On January 1, 1999, the European System of Central Banks (ESCB) began conducting monetary policy for eleven of the fifteen nations of the European Union, formally creating an economic and monetary union. The ESCB is governed by the decision-making bodies of the European Central Bank (ECB) and manages Europe's new currency, the euro. The structure of the ESCB is in many ways similar to that of the Federal Reserve System, with the ECB playing a role similar to that of the Board of Governors and the various national central banks occupying positions not unlike those of the regional Reserve Banks. In this article, Mark Wynne compares the two central banks, drawing on the insights of economic theory to shed light on how monetary policy is likely to be made in Europe under monetary union. He documents two key differences between the ESCB and the Federal Reserve System. First, the ESCB has a much stronger price stability mandate. Second, power is much more diffusely distributed in the ESCB. The strong mandate for price stability will enhance the euro's credibility. But the diffuse power structure may make it difficult to resolve conflicts, which will undermine credibility. The monetary union's fate depends on which of these two features of the monetary policy process dominates.European Central Bank ; European Economic Community ; European currency unit ; European Monetary System (Organization)

Beyond the border : Europe - risk and reward under monetary unification

European Central Bank ; European currency unit ; European Monetary System (Organization) ; Unemployment - Europe

Inflation targeting as a monetary policy rule

The purpose of the paper is to survey and discuss inflation targeting in the context of monetary policy rules. The paper provides a general conceptual discussion of monetary policy rules, attempts to clarify the essential characteristics of inflation targeting, compares inflation targeting to the other monetary policy rules, and draws some conclusions for the monetary policy of the European system of Central Banks

The launch of the euro

The introduction on January 1, 1999, of the euro--the single currency adopted by eleven of the fifteen countries of the European Union--marked the beginning of the final stage of Economic and Monetary Union and the start of a new era in Europe. The creation of a single currency and a single monetary policy has provided both extraordinary challenges and exceptional opportunities within Europe. This article reviews the organization, objectives, and targets of the euro area's new central bank and discusses some of the early challenges it has faced in setting and implementing monetary policy with the new common currency. It discusses the initial functioning of the payment system and the interbank market and reviews the effects to date of the single currency on European bond and equity markets, on the banking system, and in euro-area transactions.Euro ; European Monetary System (Organization) ; European currency unit

The development of monetary policy in the 20th century – some reflections

In this paper I outline – from a practitioner’s as well as from a researcher’s perspective – several of the key developments that took place during the last century in monetary policy. In particular, I describe how the monetary system evolved from gold standard, prevailing throughout most of the last century, to paper money and how the norm in central banking changed from pure discretion after World War II to transparency and independence. I furthermore analyze how the exchange rate regime under Bretton-Woods impacted on countries’ monetary policy and, with a focus on Europe, how European Monetary Union (EMU) emerged from the European Monetary System (EMS). I then outline today’s relatively broad consensus on monetary policy and how it developed from a learning process on the side of central banks and important contributions from research. Finally, after arguing that the ECB’s monetary policy which fruitfully combines past experience and current research is a successful and promising approach, I outline some challenges lying aheadmonetary policy, monetary system, European Monetary Union, ECB

Legal structure, financial structure, and the monetary policy transmission mechanism

Among the many challenges facing the new Eurosystem - the European Central Bank and the central banks of the eleven members of the European Monetary Union - is the possibility that participating countries will respond differently to interest rate changes. This paper provides evidence that differences in financial structure are the proximate cause for these national asymmetries in monetary policy transmission and that these differences in financial structure are a result of differences in legal structure. The author concludes that unless legal structures are harmonized across Europe, the financial structures and monetary transmission mechanisms of the European Union countries will remain diverseEuropean Central Bank ; European Monetary System (Organization) ; Monetary policy - Europe ; Europe