Stability Culture as a Precondition for the Sustainability of the European Monetary Union (EMU)

Abstract

The preparations for the European Monetary Union (EMU) are by now up to the schedule agreed upon in the Maastricht treaty. It started on July 1, 1990 with stage I in which mainly a free movement of capital within the EU as well as a closer cooperation on economic, fiscal, exchange-rate and monetary policies should have been realized. This was considered to be the case when entering stage II on January 1, 1994 in which the preparation for the final stage via economic convergence in the member states and the establishment of the European Monetary Institute (EMI) as forerunner of the European Central Bank (ECB) are most important. The main task of the EMI is the planning of instruments, strategies and technical regulations necessary for the conduct of the common monetary policy and making them ready for the use by the ECB in the third stage. Up to then the responsibility for monetary as well as exchange rate policy remains with the member states. Besides this the EMI has to strengthen the cooperation between the national central banks and the coordination of their monetary policy. In addition, it has to survey the convergence process and to supervise the functioning of the European Monetary System (EMS).