European Economic and Monetary Union: History, Trends, and Prospects

Abstract

This paper analyses in depth the law of European Economic and Monetary Union, as well as its history, trends and prospects. It is divided into seven sections. Section 1 is the introduction; it deals with the history of monetary union in Europe and outlines some basic concepts. Section 2 considers the conditions for the adoption of the euro. Section 3 deals with economic union/economic policy coordination. Section 4 examines the European System of Central Banks and the European Central Bank. Section 5 deals with the law of the euro. Section 6 deals with the external relations of the euro. Section 7 presents some concluding observations and recommendations, as well as a brief update of recent developments.1 In this way an author has described the signing of the Maastricht Treaty of 7 February 1992, in particular due to the objective assigned to the then3 Community of building an Economic and Monetary Union (EMU). The same author envisages EMU as the third major phase in the construction of the Community, after the signing of the Rome Treaty itself and the Single European Act on the completion of the single market.4 EMU is not indeed a policy like the others that are provided in the EC Treaty. It is another stage of European integration.5 As coined by the ‘Delors Report’ to which reference will be made later on, EMU ‘would represent the final result of the process of progressive economic integration’.6 According to the same report, EMU ‘would imply complete freedom of movement for persons, goods, services and capitals, as well as irrevocably fixed exchange rates between national currencies and, finally, a single currency. This, in turn, would imply a common monetary policy and require a high degree of compatibility of economic policies and consistency in a number of other policy areas, particularly in the fiscal field.’7 These two sentences encapsulate the concept of EMU for its founders. Article 119 of Title VIII on Economic and Monetary Policy of the TFEU (slightly revised in comparison with Article 4 of the EC Treaty in the Nice version) includes these different elements and, in addition, the reference to free competition, but without expressly alluding to EMU. In the concept of EMU as used in the Treaties, monetary union is clearly the central and most innovative element.