Essay on European Economic and Monetary Union

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European Economic and Monetary Union The Economic and Monetary Union (EMU) is a single currency area within the European Union in which people, goods, services and capital move without restriction (Europa Quest (1), 2001). Imperative to the success of the EMU is the implementation of a single European currency, the Euro, and the application of specific macro-economic policies by the EMU member states (Harris, 1999: 78). Moreover, it is the foreseeable intent of European governments to create a framework for stability, peace and prosperity through the promotion of structural change and regional development (JP Morgan, 2001). This essay will endeavor to highlight the fundamental gains likely to be accrued by the European business community …show more content…
In addition, the revaluation of the German Deustchemark and the devaluation of the French Franc, created considerable exchange rate volatility within Europe (Barber, 1999). It was a common held belief amongst many member states, that Europe’s ability to compete within the global economy hinged on the introduction of a single currency (d’Estaing, 1997). Hence, in 1970 the Werner Committee was established to resolve the most efficient means to converge economic performance and currencies (Harris, 1999:76). The Werner Report proposed a three-stage process for achieving a complete monetary union within a decade. The final goal would be the free movement of capital, the permanent locking of exchange rates and the eventual replacement of the EC6 nations notes and coins with a single currency (Barber, 1999). The committee proposed a complete European Monetary Union by 1980, however the failure of the Smithsonian Agreement, the subsequent introduction of a floating exchange rate regime and the infamous Oil Price Shocks of the 70s, caused the plans outlined by the Werner Committee to be abandoned (Harris, 1999:79). In retrospect, the endeavors of the EMU were bold considering the erratic economic climate of the 1970s (Kenwood and Lougheed, 1999:310). Yet, even in this period of economic uncertainty, EC member’s still persued the concept of European Unity (Princeton Economics, 1998). In 1979, the European Monetary

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