Gustavsson, Sverker. (1999) “Monetary Union without Fiscal Union: A Politically Sustainable Asymmetry?”. In: UNSPECIFIED, Pittsburgh, PA. (Unpublished)
Ten years ago, the member states of the European Union decided to embark upon a new policy. An agreement between Helmut Kohl and François Mitterand in the spring of 1990 cleared the way for the Treaty of Maastricht. This agreement was based on the assumption that monetary policy could be centralized without any comparable centralization having to take place in the management of tax bases of the member states. In this way, a feared democratization of the provisionally established suprastate could be averted. As long as it was just the market and the currency that were centralized, it would be enough that democracy obtained within each member state. The democratic deficit would only become a problem for the Union when power over taxes and expenditures had become centralized too. Thus, contrary to earlier fears, monetary union need not call forth fiscal union. The governments believed, then, that they could institute the one without risking the establishment of the other.
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