"Economic and Monetary Integration in the European Union: The Role of Experts in Creating an 'Asymmetrical EMU'"

Verdun, Amy. (1995) "Economic and Monetary Integration in the European Union: The Role of Experts in Creating an 'Asymmetrical EMU'". In: UNSPECIFIED, Charleston, South Carolina. (Unpublished)

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Abstract

This paper examines why policy-makers (experts in central banks, ministries of finance, employers' organizations and trade unions) of Britain, France, and Germany have accepted an 'asymmetrical' Economic and Monetary Union (EMU) which incorporates a developed monetary component, yet a relatively underdeveloped economic component. To that end the paper examines the following hypothesis: the monetary implications of EMU have been the primary influence in the process of creating an EMU in Europe. Policy-makers did not scrutinize the potential effects of EMU on other policy areas, e.g. on national fiscal and social policies, or the distribution of wealth across regions. The paper shows that this 'asymmetrical' focus results from a consensus among policy-makers that further integration in the early 1990s would only be feasible in the realm of monetary policy-making. However, it has also become clear that the actors specifically did not want to develop the contents of the 'Economic Union'. Actors perceived that harmonization of fiscal and social policies was best left to national choices and market forces for it was politically too sensitive to tackle these questions at the supranational level, and too costly for the individual politicians in their respective member states. Moreover, as it was believed that national welfare systems were too rigid and expensive, it was considered helpful that market forces could make a useful contribution to the restructuring of domestic economies. Indeed, if member states are to remain internationally competitive, the latter was considered a necessity. The paper concludes that all actors had specific interests which could have been served only by accepting an 'asymmetrical EMU'. In the monetary field, the EMU institutionalizes and legitimates German monetary policies within a European framework, whilst in the economic and social field the EMU offers political legitimation for restructuring the welfare state.

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