European Monetary Cooperation Research Articles

Кризис бреттон-вудской валютной системы и начало европейского валютного сотрудничества

The article aims to identify the impact of the crisis of the Bretton Woods monetary system on the beginning of European monetary cooperation. Russian scholars' publications on European monetary integration usually examine in detail the internal prerequisites for the emergence of the Werner Plan and only sketch the external environment. Drawing on available European and American sources, this research provides a more nuanced picture of the origins of European monetary cooperation in the context of a general collapse of the post-war international monetary order. The article begins with the characteristic of the main features of the Bretton Woods monetary system. In the late 1960s and early 1970s, the intrinsic contradictions of the Bretton Woods mechanism, such as the problem of liquidity, confidence in the key currencies, and the adjustment mechanism, generated numerous monetary crises. All efforts to reform the international monetary system stalled because of disagreements between countries with surplus and deficit payment balances. The research also focuses on the US monetary policy. As the US dollar was the main reserve currency, the stability of the entire monetary system depended on its position. Since the late 1960s, conflicts over monetary issues developed between the United States and Western European countries, culminating in the Nixon administration's unilateral decision to abolish the gold standard in August 1971. Monetary crises and the weakness of the dollar pushed the countries of the European Economic Community to develop their own currency grouping. The article analyses the Werner Plan of 1970 that proposed the creation of an Economic and Monetary Union (EMU) with a single European currency as the ultimate goal. Based on fixed exchange rates between European currencies, the EMU represented a regional replica of the Bretton Woods system. The single European currency was seen by Europeans as an alternative to the dollar and the unpredictable American policy. The author concludes that the end of transatlantic monetary cooperation gave an additional impetus to the development of European monetary integration. Although first European efforts to create the EMU had failed because of the different approaches of France and the Federal Republic of Germany as well as the economic crisis of the early 1970s, the Werner Plan marked a crucial phase in the history of European integration. The Werner Report became a blueprint for the European Monetary System (EMS) of the late 1970s. The success of the EMS paved the way for the creation of the European Monetary Union envisaged in the Maastricht Treaty of 1991 establishing the European Union and the adoption of a single European currency - the euro.

Helmut Kohl and the Monetary Union

Wilfried Loth Helmut Kohl and the Monetary Union Numerous myths have shrouded the path leading to the Treaty of Maastricht. Was the renunciation of the German mark in favor of a European Community currency the price to be paid for German reunification? Or, when the unexpected reunification of the two Germanies rocked Europe in the winter of 1989/90, had the way already been paved for a monetary union thanks to the path dependency within European integration policy and the tenacity of François Mitterrand and his Italian and Spanish allies? Did Helmut Kohl yield all too readily to those tenacities “in order to make progress towards the establishment of a political union?” Should we therefore concur with Kohl’s biographer Hans-Peter Schwarz who speaks of a “tragic figure who wanted to do good and in many cases did so, albeit going too far and trusting too much?”1 These still unanswered questions have become all the more pressing in light of the sovereign debt crisis in the eurozone that has underscored the weaknesses of the Treaty of Maastricht. The only way to get at the heart of these issues and find reliable answers is to take a closer look at Helmut Kohl’s role in the development of the Treaty of Maastricht. The Monetary Union Project In the first few years of Helmut Kohl’s chancellorship, his agenda focused on intensifying the cooperation in monetary policy within Europe.2 The European Monetary System (EMS), which was introduced in 1979, provided greater incentives to establish a monetary union and overcome the crisis of stagflation than the unsuccessful “currency snake” that had been introduced in 1972. Not only did Translation by Christopher Marsh. 1 Hans-Peter Schwarz, Helmut Kohl. Eine politische Biographie, Munich 2012, p. 936; for the argument about the instrumental character of the decision in favor of monetary union, see ibid., p. 935. 2 On the long run-up to the European Monetary Union, see Horst Ungerer, A Concise History of European Monetary Integration. From EPU to EMU, Westport/CT 1997; on the details of the decision-making processes, see Emmanuel Mourlon-Druol, A Europe Made of Money. The Emergence of the European Monetary System, Ithaca/NY 2012; Harold James, Making the European Monetary Union. The Role of the Committee of Central Bank Governors and the Origins of the European Central Bank, Cambridge/MA 2012, and Wilfried Loth, Building Europe. A History of European Unification, Berlin/Boston 2015. 158 Wilfried Loth the participating states agree to limit currency fluctuations to a maximum of 2.25 percent relative to the central rate of their currencies against the US dollar, but also the EMS required governments to intervene in the money markets and adopt fiscal consolidation measures when the limit was in danger of being reached. To ensure the effectiveness of such interventions, the respective governments transferred 20 percent of their gold and currency reserves to the European Monetary Cooperation Fund and the European Currency Unit (ECU) ensured transparency when it came to the financial transactions of the participating countries. The EMS thus created a mechanism that not only enabled countries with weak currencies, such as France, to fight inflation, but also made it possible for Germany to resist the upward pressure on the German mark stemming from the weak US dollar. As a result, the countries of the European Community were able to return to a path of economic growth, uncoupled from the US dollar. The success of the EMS was jeopardized, however, when François Mitterrand took office and decided to introduce a governmental economic stimulus and job creation package early on in his presidency. But, in March 1983, he then switched to a rigid austerity policy, prompting all member states of the EMS, without exception , to prioritize the fight against inflation. Consequently, inflation rates across Europe dropped closer to those of West Germany and the Netherlands, making further monetary adjustments unnecessary . Only Italy and Ireland had to agree to significant devaluations of their currencies: The value of the lira dropped by six percent in July 1985 and that of the Irish pound by eight percent in August 1986. To prevent flight from their currencies , underperforming countries had...

The Euro, The Gold Standard, and German Power

Kindleberger’s theory of hegemonic stability states that fixed exchange rate regimes require a leader that will provide it with disproportionate resources to ensure stability. Applying his theory to European monetary cooperation, we argue that, like the tools of Goethe’s “Sorcerer’s Apprentice,” European Monetary Union was constructed as a “self-regulating system,” and it threatens to run amok without a hegemonic leader. Germany has exercised “soft hegemony” in Europe, providing the European Union with disproportionate resources to stabilize the single market. It has the capability to be the Eurozone’s leader. But, by 2017, blinded by its ordoliberal ideology, i t refused to do so, instead placing the burden of cooperation on the weak. If Germany continues to refuse to play the role of the hegemonic leader, European Monetary Union faces collapse.

National and Regional Solutions to Global Challenges Problems of Monetary Policies and Regional Monetary Cooperation in East Asia and the European Union

This paper presents some thoughts on what we can learn from investigating European and East Asian monetary policies and monetary cooperation in historical comparative perspective. This fresh approach to the ongoing global and regional crises highlights the necessity to view problems of national and regional monetary policies in East Asia and Europe in the global context of the post Bretton Woods era and the problems of monetary policies amid economic and financial globalization. More concretely, the paper highlights the following aspects.1. The national strategies followed by developmental states in East Asia as well as intensified regional cooperation in monetary policies in the EU since the 1970s and the introduction of the euro in 1999 were initially both very successful solutions. The European integration process and the economic rise of the East Asian region are considered two of the most impressive success stories in recent history. Both successful solutions, however, have encountered problems since the 1997/98 Asian Financial Crisis and the ongoing euro crisis since 2010. 2. Since 1997, East Asian countries tried to supplement national monetary policies with regional cooperation in form of the Chiang Mai Initiative (CMI). The CMI, however, has proven to be not successful and is unlikely to lead to further regional cooperation and integration in the region. In effect, East Asian countries remain dependent on national self-help solutions.3. Since the beginning of the global financial crisis in 2008, serious deficiencies of the European Economic and Monetary Union (EMU) have become apparent. The notion that the introduction of the euro and fiscal discipline alone would lead to economic convergence proved to be an illusion as economic imbalances in the region widened and weakly regulated financial markets led to huge asset bubbles.4. Europe and the East Asian region are at critical junctures of their development as both their national and regional solutions face challenges. National solutions become increasingly expensive with a tendency to exacerbate global economic imbalances and create regional conflicts. The EU faces the choice between a crisis solution strategy that focuses on austerity and structural adjustment in deficit countries and one that wants to regionalize the costs of the crisis and create a de facto European federal state.

Norman's Lament: The Greek and Euro Area Crisis in Historical Perspective

This article uses original and secondary archival sources to examine the value of the distinction between creditor and debtor states in explaining the behaviour of domestic elites in international and European macroeconomic and monetary cooperation, compared to variables like size and trade. It highlights the paradox and tension between changes in institutional forms and stronger incentives to cooperate (Montagu Norman's ‘new Europe’) and persisting patterns in strategic behaviour across space and over time. Central to this continuity is a fundamental asymmetry of power between creditor and debtor states. The imbalances that underpin creditor–debtor state relations also reveal the structural underpinnings of arguments from economic principle, ‘who argues what’ and receptiveness to economic ideas and thinkers. Not least, the case studies and arguments in the article offer fresh and different insights into British and French attitudes to European coordination.

Les choix monétaires européens 1950-1980

This article focuses on three key dates in analyzing the monetary policy options arrived at by the States of Europe over the course of the last thirty years. By the creation of the European Payments Union in 1958, the European States made a regionalist policy option by establishing the intra-European convertibility of their currencies while maintaining exchange restrictions with respect to the dollar zone. In 1958 on the other hand resumption of general convertibility of currencies demonstrated the "global-linkage" policy option of the decision-makers of the period by removing any specifically European substance from the European monetary agreement. From this perspective, the decision of December 1978 to institute a monetary System would clearly appear to be by far the most important initiative taken in some time to reestablish a framework for European monetary cooperation. With regard to international monetary relations, eight countries have therefore, within three decades, chosen two regionalist policy options and one global-linkage policy option. The purpose of this study is to identify the circumstances, reasons and impact of the policy options that have successively been implemented.

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

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.

Money and Power in Europe: The Political Economy of European Monetary Cooperation. By Matthias Kaelberer. Albany: State University of New York Press, 2001. 254p. $49.50.

The puzzle of European monetary cooperation—namely, why sovereign nation-states would relinquish monetary autonomy in return for some measure of exchange rate stability—has produced a growing body of highly informed and theoretically strong works on European integration. Matthais Kaelberer's account fits nicely into this mold. The author argues convincingly that European monetary cooperation—especially Germany's leading contribution to the European Monetary Union (EMU)—is the result of a structural conflict of interest between weak and strong currency countries over the rules of monetary cooperation. In laying out his “structural” argument, Kaelberer's analysis, as he notes in his own words, “complements rather than substitutes for other explanations of European monetary cooperation” (p. 6). In making this claim, his work will not settle the extremely lively theoretical debate on European integration, and European monetary cooperation more specifically. However, it is an important contribution to the literature and fills in some of the theoretical void involving concepts of “leadership” and “asymmetry” of power that help explain European integration.

Ideas, Interests, and Institutions: The Domestic Politics of European Monetary Cooperation

Ideas, Interests, and Institutions: The Domestic Politics of European Monetary Cooperation

Monetary Cooperation in East Asia: A Survey

This paper surveys the growing literature on monetary cooperation in East Asia that goes beyond the Chiang Mai Initiative. It compares and contrasts the various proposals for cooperation such as the Williamson basket peg, the Asian monetary system, and the yen block as to their crisis prevention impact and their feasibility, both economic and political. The paper also reviews the evidence on the readiness of East Asia and some of its proper subsets for a currency union in the light of experiences elsewhere, especially of European monetary cooperation. On pure optimum currency area calculus alone, a case can be made for an East Asian currency union. But the great historical, developmental, political, and cultural diversity here highlighted stands as a formidable obstacle. Nonetheless, as the experience of Euroland shows, the very pursuit of even such a distant vision already brings benefits to participants.

European Economic and Monetary Cooperation from an Historical Perspective

Analyse the issues related to the European Economic and Monetary Union and positive and negative impacts of the single European currency Euro launched on 1st January, 1999, on the economic and political environment in Europe. Launching of Euro strengthens Europe's bargaining position vis-a-vis the United States and other countries. Creation of new financial instruments and convergence of inflation and interest rates will have an impact on investment decisions and cross-border flows will increase the size of the markets.

The Mark of the Bundesbank: Germany's Role in European Monetary Cooperation. By Dorothee Heisenberg. Boulder, CO: Lynne Rienner, 1999. 214p. $49.95. - Germany and the Politics of Europe's Money. By Karl Kaltenthaler. Durham, NC: Duke University Press, 1998. 146p. $49.95 cloth, $16.95 paper. - Deutsche Mark Politics: Germany in the European Monetary System. By Peter Henning Loedel. Boulder, CO: Lynne

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The mark of the Bundesbank: Germany's role in European monetary cooperation

With the Bundesbank now the dominant German actor in international monetary cooperation, Germany's partner states have begun to consider the requirements of the bank - rather than the government - paramount. Dorothee Heisenberg maintains that the evolution of the Bundesbank is key to understanding how and why Europeans chose to achieve monetary union. Heisenberg demonstrates that the domestic relationship between the Bundesbank and the German government is a significant determinant of cooperation at the European level. Drawing on historical evidence from 1968 to the present, she reveals that the bank has at times been willing to change its domestic monetary policies solely on the basis of the international situation. Similarly, it has become increasingly likely to challenge the government's monetary policy, and was the primary force in negotiating EMU.

Financial Markets and European Monetary Cooperation: The Lessons of the 1992-93 Exchange Rate Mechanism Crisis

1. Introduction 2. Exchange rate stability in Europe: a historical perspective 3. The unfolding of the 1992-3 ERM crisis 4. Financial markets and ERM credibility 5. Modelling currency crisis 6. A center-periphery model 7. Unilateral pegs and escape clauses: the role of domestic credibility 8. Policy coordination and currency crisis 9. What causes the system to crumble 10. Rebuilding the system: what next?

The Politics of Monetary Leadership and Followership: Stability in the European Monetary System since the Currency Crisis of 1992

Despite widespread scepticism, there is a fundamental continuity in the stability of the European Monetary System (EMS) before and after the 1992 crisis. Although speculative pressures provoked European leaders to widen the fluctuation bands of the Exchange Rate Mechanism (ERM), thus altering substantially the official commitment of member governments to coordinate monetary policies and exchange rates, the values of currencies in the hardcore of the EMS have remained close to their pre-crisis parities with limited fluctuations. European monetary cooperation continues informally, achieving much more stability than the wide bands suggest. The task of the article is to explain the puzzling continued success of the EMS. First, this article re-specifies the problem of international monetary cooperation as a leader-follower interaction with inherently hierarchical attributes. Second, the article outlines the causes of exchange-rate stability in Europe. Finally, the article emphasizes that French monetary followership is the key to the stability of the post-crisis arrangement and offers a preliminary interpretation of the sources of French behaviour.

Hegemony, Dominance or Leadership?

This article explains Germany's function and role in European monetary cooperation. It refutes two popular hypotheses in this context — (1) that Germany serves as a regional hegemon comparable to the role of the United States in the Bretton Woods system; and (2) that Germany is dominant in terms of influencing policies in a unidirectional sense. Instead it argues that Germany's position of monetary power is policy-based by virtue of its status as a strong currency country. This has been the basis for two crucial leadership functions Germany has provided in the European Monetary System (EMS), namely those of a standard-setter and broker. The article also describes the changing circumstances for the exercise of leadership that are associated with a move to a monetary union as envisioned in the Maastricht Treaty. As in the case of the EMS, the ultimate success of a future monetary union depends heavily on the emergence of leadership.

European Communities: Council Regulation Establishing a European Monetary Cooperation Fund

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International Monetary Co-operation, 1945-1952

List Of Tables Key To Abbreviations Used Preface PART ONE FIRST PRINCIPLES INTER-COUNTY PAYMENTS The Problem of External Liquidity The Problem of External Disequilibrium The Problem of the Transmission of Business Depressions Conclusion EXCHANGE RATES INTERNATIONAL LIQUIDITY The Means of International Settlement Multilateral Settlement in Conditions of Equilibrium Multilateral Settlement in Conditions of Disequilibrium The Scope for International Co-Operation INTERNATIONAL DISEQUILIBRIA Devaluation in Favourable Circumstances Devaluation in Unfavourable Circumstances Factors Affecting the Elasticity of Demand for Exports Summary and Conclusions The Concept of 'Suppressed Disequilibrium' THE INTERNATIONAL TRANSMISSION OF DEPRESSIONS PART TWO MACHINERY OF INTERNATIONAL MONETARY CO-OPERATION THE INTERNATIONAL MONETARY FUND The Objects of the Fund Exchange Rates Additional Liquidity Multilateral Settlement THE INTERNATIONAL MONETARY FUND (cont.) Restrictions on Trade and Payments The Treatment of Disequilibria The International Transmission of Depressions Conclusion EUROPEAN MONETARY CO-OPERATION The Intra-European Payments Schemes The European Payments Union The E.P.U. STERLING Sterling under the Gold Standard The Pre-War Sterling Area Wartime Post-War Changes The Pathology of Sterling PART THREE THE COURSE OF EVENTS SINCE THE WAR BEFORE SEPTEMBER 1949 Exchange Rates The Causes of the Post-War Disequilibria Suppressed and Open Disequilibria in the Post-War Period International Settlements in the Post-War Period The International Transmission of Depressions SEPTEMBER 1949 AND AFTER READING LIST INDEX