The European Monetary System and European Monetary Union

Abstract

In this chapter we examine one of the most important economic issues ever tackled by the European Union (EU), namely, European Monetary Union (EMU). In January 1994 the European Union was expanded from 12 to 15 members following the accession of Austria, Finland and Sweden. The EU countries have a commitment to free trade between each other as well as permitting free movement of labour and capital between member states, and in addition they have a common trade policy vis-a-vis the rest of the world. By 1992 the member states had created a so-called ‘single market’ by tackling non-tariff barriers. The increasing integration of the member states’ Economics into a single market inevitably raised the issue of whether this market should be served by a single currency.