Knowledge, power and monetary bargaining: central bankers and the creation of monetary union in Europe

Abstract

This article specifies and explains the role of central bankers as an epistemic community in the process of European monetary co-operation. The article argues that it is necessary first to find the right balance between structure and agency and second to specify alternatives to the observed outcomes. While structure is arguably a strong shaping force for outcomes in monetary bargaining, it is ultimately indeterminate in predicting change. Contrasting the Maastricht process with potential alternative outcomes, I argue that the content of the Maastricht Treaty on European monetary union can be explained largely by underlying structural factors. On the other hand, the process of institutional change itself raises the issue of agency. Within this process of institutional change, the epistemic community of central bankers played a special role to facilitate the Maastricht accord.