The History of the European Monetary Union

Comparing Strategies amidst Prospects for Integration and National Resistance

by Daniela Preda (Volume editor)
©2017 Edited Collection 324 Pages
Open Access
Series: Euroclio, Volume 99


The financial and economic crisis that hit Europe in 2009 brought out the precariousness of the monetary union, accentuating the economic disequilibrium among European nations and strengthening Euro-skepticism.
The crisis served as a catalyst for long-standing and unresolved problems: the creation of a singly monetary area with intergovernmental control, the final act in the construction of a Europe economically united but without a government and a state; the consequent discrepancy between forming a consensus that remains in large part national and the political dynamics in Europe; the sustainability of a monetary union in the absence of an economic-social union, which presents again the long-standing debate between "monetarist" countries and "economist" countries.
This book aims at placing current events within a long-term framework composed of a mosaic of multidisciplinary contributions that can provide the reader with keys which are adequate for an understanding of these events and useful for opening up new horizons.
The book begins with a look at 20th-century monetary unification projects in an attempt at reconstructing the long road toward the single currency: the first monetary unification projects in the 1950s and 1960s; the turbulence of the 1970s; the new impetus given by the European Monetary System to the cohesion among European countries; the causes of the 1992 crisis; and the long struggle for the Monetary Union, which would end at Maastricht. Finally, it focuses on the most recent events – the creation of the Eurozone and its crisis – starting from the turbulent years of the first decade of the new millennium and ending on May 31, 2016, just before the Brexit referendum.
The book focuses on analyzing the strategies undertaken during the monetary unification process, underscoring, on the one hand, the conviction of the Founding Fathers of the EMU that a single currency would favor further progress toward a more stringent economic and political integration, and on the other the continuing national resistance to the transfer of sovereignty from the national states to the European Union.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author(s)/editor(s)
  • About the book
  • This eBook can be cited
  • Table of Contents
  • Introduction (Daniela Preda)
  • Opening Address (Mario Venturi)
  • Opening Address (Realino Marra)
  • Three Lessons from the Past: Monetary Unions in the 19th Century Europe (Lara Piccardo)
  • 1. The Latin Monetary Union (LMU)
  • 2. The Germanic Monetary Union (GMU)
  • 3. The Scandinavian Monetary Union (SMU)
  • 4. Conclusions
  • Robert Triffin et le processus d’intégration monétaire européenne (Ivo Maes)
  • 1. Études et début de carrière
  • 2. Triffin et le système monétaire international
  • 3. Triffin et l’intégration monétaire européenne
  • 3.1 L’Union européenne des paiements (UEP)
  • 3.2 Le bilan du Traité de Rome aux yeux de Triffin
  • 3.3 Un Fonds de réserve européen
  • 3.4 Une monnaie européenne
  • 4. Conclusion
  • Bibliographie
  • Le Plan Werner et la découverte de l’Europe monétaire (Andreas Wilkens)
  • The End of Bretton Woods and the Setting up of the Snake (Maria Eleonora Guasconi)
  • 1. The Nixon Shock
  • 2. The European Response
  • 3. The Setting up of the “Snake”
  • 4. Conclusions
  • The European Monetary System (Giovanni Battista Pittaluga)
  • 1. EMS Setting-up and Institutional Architecture
  • 2. The Way the System Worked
  • 3. Was the EMS a Success or a Failure?
  • 4. The Crisis of 1992
  • 5. Conclusions
  • References
  • The Role of Giulio Andreotti in the Birth of the EMS and of the Monetary Union (Daniela Preda)
  • 1. Toward the EMS. The Contribution of the Study Groups
  • 2. Italy on the Eve of the EMS
  • 3. Andreotti’s Role in the EMS Negotiations
  • 4. Italy’s Participation in the EMS
  • 5. From the EMS to the Single Currency: Elements of Continuity
  • La présidence Mitterrand, fer de lance de l’Union monétaire européenne (1988-1992) ? (Jean-Marie Palayret)
  • 1. Premières escarmouches franco-allemandes sur la voie de l’UEM
  • 2. Stratégie française et réactions allemandes face au projet d’UEM
  • 3. La réunification allemande et les pressions françaises en faveur de l’UEM
  • 4. Négocier l’Union économique et monétaire : la France se rallie à la Banque centrale européenne et aux critères de convergence, mais rend l’UEM irréversible
  • 5. Le débat français sur la ratification du Traité de Maastricht
  • 6. Conclusion
  • The Action of the European Federalist Movement for the European Currency (Guido Montani)
  • 1. Mario Albertini’s Strategic Turning Point: Constitutional Gradualism
  • 2. How the Action Developed
  • 3. Taking Stock of the Past and Looking to the Future
  • 4. Politics, Economics and Federalism
  • L’euro entre problèmes de naissance et incertitudes identitaires (1991-2016) (Carlo Degli Abbati)
  • 1. Les difficultés imprévues de gestation (1991-2002)
  • 2. Les années de la crise existentielle (2008-2012) et les perspectives actuelles (2016)
  • Bibliographie
  • Fiscal Discipline and Growth within EMU (Alberto Majocchi)
  • 1. The Logic Underlying the Process towards the Maastricht Treaty
  • 2. From the Maastricht Constraints to the Stability Pact
  • 3. The Content of the Stability and Growth Pact
  • 4. From the SGP to the Fiscal Compact
  • 5. The Degree of Centralisation within the Eurozone
  • 6. Reform Proposals of the EMU Governance
  • 7. Differences in Economic Policy Management between the United States and Europe
  • 8. The Constraints on National Expansionary Policies
  • 9. A Policy Promoting Investments and Production of Public Goods
  • 10. The Juncker Plan: a Turning Point, but not enough
  • 11. New Resources for Funding the Juncker Plan
  • 12. Towards a Eurozone Budget
  • Crisis and Possible New Start of Integration Process. Beyond the Eurozone Predicament (Franco Praussello)
  • 1. Flaws in the Design of the Eurozone
  • 2. European Monetary Integration from ex-ante Forecasts to ex-post Outcomes
  • 3. Global Financial Crisis and Impacts on Sovereign Debt Predicament within the Euro Area
  • 4. Different Remedies for Restoring Economic Growth
  • 5. A Biased Institutional Model Leading to a German Europe
  • 6. Austerity or the Wrong Treatment
  • 7. Possible Ways Out of the Eurozone Crisis
  • 8. Final Remarks
  • From Pringle to Gauweiler. The Difficult Years of European Monetary Union and Their Impact on the EU Legal System (Francesco Munari)
  • 1. Introductory Considerations: Problems of Interpretation in EU Law following the Euro Crisis
  • 2. The Limited Attention of Jurists to EMU Rules…
  • 3. …and the Sudden Wake Up Call caused by Emergency Judgements: ESM and EMU, a Clash of Two Worlds in the Pringle Case
  • 4. The Principle of Conditionality in the Face of Economic Policy Measures and Monetary Policy Choices
  • 5. Economic Policy and Monetary Policy in the Pringle and Gauweiler Judgements: Rule of Law or Realpolitik?
  • 6. Fundamental Rights and Freedom under the ESM
  • 7. The Bundesverfassungsgericht’s Conditioning of EMU and EU Rules. Quousque tandem?
  • 8. Tensions from the Mediterranean EU, but not only from there
  • 9. The Gauweiler Judgement and its Possible Impact on the Structure of the EMU
  • 10. Conclusions
  • On the Metamorphosis of the Crisis and the Prospects for European Economic Governance (Adriano Giovannelli)
  • 1. EMU under Threat, the Bailout Funds and the Troika
  • 2. A Growing Political Role for the Eurotower
  • 3. European Quantitative Easing and the Crisis
  • 4. The Greek Stress-Test for the Eurozone
  • 5. The Need for Increased Fiscal Discipline
  • 6. “Stupid” Austerity and Deficit Spending Policy
  • 7. The Difficult Path towards a “Real” Banking Union
  • 8. The Debate around the Five Presidents’ Proposals
  • 9. Metamorphosis and Deepening of the Crisis
  • 10. Attempts to Wake from the Brexit Nightmare
  • 11. The Danger of Halting in Mid-Stream
  • The Authors
  • Series index

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The financial and economic crisis that hit Europe in 2009 brought out the precariousness of the monetary union, accentuating the economic disequilibrium among European nations and strengthening Euro-skepticism. As occurred during the 1970s, the charges of self-interest levelled at the stronger countries were countered by accusations that the weaker ones were lacking in the necessary economic rigor.

The crisis served as a catalyst for long-standing unresolved problems: the creation of a single monetary area with intergovernmental control, the final act in the construction of a Europe economically united but without a government and a state; the consequent discrepancy between the forming of a consensus that remains in large part national and the European context of political dynamics; and the sustainability of a monetary union in the absence of an economic-social union, which presents again the long-standing debate between “monetarist” countries, whose priority was the establishment of common constraints to monetary policies, and “economist” countries, which gave priority to harmonizing economic policies before undertaking monetary cooperation.

The history of European unification provides us with several useful points to reflect on in terms of current events.

If at the start of the continental unification process the final objective of a European federation was clearly visible, beginning with the Treaties of Rome this objective became merely ancillary. Monnet’s functionalism called for a vertical integration by sector, characterized by the creation of supranational institutions with broad powers. In fact, it consisted in a sort of constitutional gradualism, whose final stage was clearly indicated as the creation of a European federation. The European Economic Community responded instead to a different idea of integration: a broader, horizontal one in which the function of the supranational institutions was to organize and manage the market. In short, this integration reflected a different functionalist model, the Anglo-Saxon functional approach, mitigated only partially by the independence of the Commission with respect to the governments and by the immediate efficacy of community legal regulations. This outmoded stance by the EEC toward the supranational aspects of the ECSC was immediately perceived by the federalist Altiero ← 9 | 10 → Spinelli, who, in a strongly-worded manner, wrote of the “hoax of the Common Market”.1

Nevertheless, even the Treaties of Rome were from the start considered as a sort of master-key to political integration on the continent, an interpretation that subsequently would continue to characterize all the stages of European integration, including monetary unification. The political aim was the last objective of the Founding Fathers, part of their cultural baggage and hopes. Interpreting the spirit and will that had led to the “European revival”, Paul-Henri Spaak stated that the men whose task it was to draw up the Treaties of Rome “croyaient que l’intégration économique les conduirait immanquablement à l’union politique” and considering economic integration as nothing other than “l’accessoire, ou tout au moins la première étape d’une révolution politique plus importante encore”.2

Therefore, political integration was part of the ‘spirit’ of the Treaties but not part of their substance.

In similar fashion, the creation of the European Central Bank and single currency, which in December of 1995 the Council of Madrid would call the “Euro”, along with the criteria set by the stability and growth pact, produced an effective and consistent transfer of sovereignty from the national states to the European Union. In this case as well, Europe proceeded, as Delors stated, “avec lo visage masqué”: that is, hiding the ultimate objective for fear of arousing the resistance of the governments.

The Monetary Union can be considered the last act of a method (Monnet’s gradualist one) that has been very fruitful, but which over time seems to have lost sight of the final objective. As in the 1950s, the Founding Fathers of the EMU were convinced that a single currency would favor further progress toward a more stringent economic and political integration: once created, the single currency would have spontaneously produced the conditions for further transfers of sovereignty and for the completion of the institutional framework of the Union. After the positive experience of the European Common Market, even many federalists shared this strategy. As highlighted in Guido Montani’s article in this book, at the start of the 1970s Mario Albertini, the President of the Union européenne des fédéralistes (UEF), ← 10 | 11 → believed the Monetary Union could have gained momentum among the political forces in support of economic unification. In his view progress of an institutional nature in the monetary field would be possible. For his part, Jacques Delors held that the Maastricht Treaty meant reopening the way toward a constituent process: monetary integration would have been the driving force behind economic and political integration. In fact, the currency was a basic element of sovereignty and could represent the foundation for a relaunching of political integration, just as in the 1950s the army was a basis for the initial attempt at creating a European state. Therefore, it appeared that the single currency had created the conditions for a common ground between the two strategies for the construction of a united Europe, economic or political union, which had opposed one another throughout the integration process. In this way economic and political integration would be joined according to the “constitutional gradualism” method.

In fact, the weakness of Maastricht at the political level was not overcome, and the monetary union did not succeed in facilitating the economic and political union.

The present crisis surrounding the euro brings to the fore once again those questions which were so urgent in the past and for which it is essential today to find solutions. It is clear that monetary union is not sustainable without an agreement among the member countries regarding the principles for the monetary policy of the Central Bank. It is not sustainable if the convergence of economic and financial actions of the member countries, guaranteed at the moment of entry into the union, is not maintained over time.

Particularly at issue, as the German Foreign Minister, Joshka Fischer, noted in his famous speech at Humboldt University in Berlin on June 12, 2000, is the fate of the functionalist strategy in the event this does not revert to the original approach set forth by Jean Monnet, where the final objective is visible and shared: the European Union as a unitary political and economic entity.

* * *

Despite the importance of the topic, studies on the history of monetary integration have been relatively patchy; above all, they have lacked a deep interdisciplinary analysis capable of understanding the historical-political, economic and legal implications.

This book, which presents the proceedings of a convention held in Genoa on May 7-8, 2015, as part of the activities of the Jean Monnet Chair ad personam in “History and Politics of European Integration”, and ← 11 | 12 → whose essays are published here after being updated on May 31, 2016, aims at placing current events within a long-term framework composed of a mosaic of multidisciplinary contributions that can provide the reader with keys which are adequate for an understanding of these events and useful for opening up new horizons. The path toward monetary union is an uneven one marked by a long and deep reflection on methods, stages and conditions. This process has developed at the same pace as the evolution of the international context, often leading to an open contrast between the distinct positions of the “monetarists” and “economists” within the individual European countries and between those who considered the single currency as the decisive instrument for overcoming the economic policy differences of the European states and opposed the return of protectionism and those who held that the national states must not deprive themselves of one of the fundamental pillars of sovereignty.

The present work begins with a look at the monetary unification projects that have characterized the 19th century – the Latin Monetary Union, the Germanic Monetary Union, and the Scandinavian Monetary Union – which are described in Lara Piccardo’s essay, in an attempt to reconstruct the long road toward the single currency, which began back in the 1950s with the creation of the European Payments Union and later continued with the first monetary unification projects. Ivo Maes focuses in particular on Robert Triffin’s role in European monetary unification within a broader international system. Maes analyzes Triffin’s relationships with various figures, such as Monnet, Marjolin and Barre, beginning with his education and writings on the monetary system, dealing at length with Triffin’s proposals for a European Reserve Fund and European unit of account as a parallel currency, which opened up new prospects in advance of monetary integration. Maria Eleonora Guasconi deals with the birth of the European monetary snake during the Bretton Woods period of instability, during which there already emerged, at the Hague Conference, a battle between “economists” and “monetarists”. The Werner report, which called for the fixing of exchange rate parities among the various currencies and the start of a common monetary policy managed by an independent European Central Bank, is the topic of Andreas Wilkens’ essay. Wilkens focuses on the German plan for a harmonization of economic policies as a way of eliminating the disparities among the economic and financial policies of European countries before the implementation of monetary policy measures. He also deals with the German government’s awareness of the political implications of the economic and monetary union. ← 12 | 13 →

Starting from the Hague Conference and Albertini’s strategic turning point, Guido Montani explores the crucial stages in the federalist battle for the European currency, drawing critical conclusions in light of federalist thinking on the relationship between economic theory and political theory.

After the turbulence of the 1970s, the European Monetary System gave new impetus to cohesion among European countries, taking a further step towards a European political union. By examining the motivations that led to the birth of the EMS and its strengthening in the 1980s, the economist Giovanni Battista Pittaluga tries to give answers to two main questions: Has the EMS been a success or a failure?, and What were the causes of the 1992 crisis in the EMS and its substantial collapse? The analysis in the essay provides a positive answer to the first question and underscores with regard to the second that the 1992 crisis clearly evidenced the limits of fixed exchange rate regimes. In her essay Daniela Preda focuses on the contribution made by the Andreotti government in Italy made to the birth of the EMS and the Monetary Union, emphasizing the relations with Europeanist and federalist economic study groups and bringing to light the close connection afforded monetary, political and economic integration by the Italian government.

Since the EMS had created a condition of relative monetary stability, it was possible to eliminate the other barriers that stopped the Common Market from being considered as an effective internal market. Despite its limits, the Single European Act brought back the prospects for an Economic Union, which, however, was not possible without a currency and a democratic consensus.

There thus began a long struggle for the Monetary Union, which would end at Maastricht. The Maastricht Treaty called for proceeding by stages toward the final goal of a Monetary Union at the same time that it instituted European citizenship, increased the Community’s authority, broadened the European Parliament’s prerogatives, and created the Common Foreign and Security Policy (CFSP) and the collaboration among states regarding internal affairs and justice. Jean-Marie Palayret analyzes the role of François Mitterrand in the process, which entailed his conversion, beginning in March 1983, to the idea of a broader monetary unification than that called for in the EMS, while also privileging Franco-German relations during that period. He points out the continuity in the relative positions of the two countries on monetary union from the Hague Conference to the Maastricht Treaty, with Germany determined to advance simultaneously toward economic and monetary union, on the one hand, and political union on the other, and France holding firm to ← 13 | 14 → a monetary union alone; to its persistence in defending French interests in the project for relaunching the monetary union; and the fact that German reunification and the breakup of the Soviet Union would have implications for European integration.

The economists Alberto Majocchi, Carlo Degli Abbati and Franco Praussello and the jurists Francesco Munari and Adriano Giovannelli focus on the creation of and crisis in the Eurozone. Alberto Majocchi examines the conditions that should be met to join the single currency, the Stability and Growth Pact, and the different steps towards an effective governance of the Eurozone area for the sake of guaranteeing financial stability and growth – the Treaty on Stability, Coordination and Governance (the Fiscal Compact), the Six Pack and the Two Pack’s, the Juncker plan – proposing at the end of his essay a reform of the governance of the EMU, with particular reference to a Eurozone budget and a Eurozone Treasury. Carlo Degli Abbati reconstructs the development and introduction of the Euro as a single currency to uncover the main reasons for the subsequent crisis, upholding the need for a courageous relaunching of Europe, which could be achieved through strengthened cooperation. Franco Praussello analyses the origins, the remedies so far employed, and the possible ways out of the ongoing Eurozone crisis in view of a possible relaunching of the integration process, focusing mainly on the errors made by Eurogroup governments in their inefficient management of the flaws that underlay the sovereign debt predicament, which put at risk the viability of monetary integration.

Francesco Munari’s essay deals with the difficult years of European Monetary Union and their impact on the EU legal system, emphasizing from the legal viewpoint the shortcomings of rules concerning the EMU and financial assistance to states, which could undermine the overall stability of the European system. Referring in particular to the decisions of the European Court of Justice in the Pringle and Gauweiler cases, Munari outlines the difficulties the Court faced in being forced to pronounce sentences strongly conditioned (in particular in the Pringle case) by politics, stating the need for a return to the rule of law, which has always characterized the legal order in the EU.

Finally, Adriano Giovannelli presents a detailed and valuable reconstruction of what the EU has already accomplished in managing the Eurozone crisis – Quantitative Easing, the European Financial Stability Facility, the European Stability Mechanism, the common monitoring of government budgets, and the Banking Union – in order to highlight the crisis in the functionalist method and the illusion of creating a currency without a state and a supranational democracy. ← 14 | 15 →

As with all large-scale crises, the present one, made more acute by the result of the Brexit referendum, opens up new horizons and presents new challenges, raising the problem of the legitimization of the European Union and adding to the European agenda the need to complete the monetary union not only with a financial, fiscal, banking and budgetary union, based on the classic functionalist method, but with the definitive shifting to the constitutionalist approach through the creation of a political union.

Daniela Preda

1 Spinelli, Altiero, La beffa del Mercato comune, September 24, 1957, in L’Europa non cade dal cielo, Bologna, Il Mulino, 1960, p. 282-287.

2 Spaak, Paul-Henri, Cambats inachevés, Vol. II, De l’espoir aux déceptions, Paris, Fayard, 1969, p. 100.

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Opening Address

It is a great pleasure to host, in this fine Branch of the Bank of Italy, the conference “The history of European Economic and Monetary Union”, organized by the Department of Political Science of the University of Genoa.

The current state of the Union will be discussed by eminent and illustrious experts, who will review its history, and then reflect on the perspectives of the integration process and the most suitable approaches to the current issues concerning Union’s role, framework, and governance.

We are close to celebrate Europe Day on next May 9. On the same day in 1950 a speech held by Robert Schuman, the then French Foreign Minister, set out the idea for a new form of political cooperation in Europe. That speech is now considered to be the beginning of the European Union.

On the occasion of this anniversary, every year the Bank of Italy and the other European Central Banks organize training courses for their staff. This year two main topics have been selected.

The first topic is the Banking Union, after the Single Supervisory Mechanism (SSM) was established six months ago. The European Central Bank has taken on specific tasks relating to the prudential supervision of euro-area credit institutions, in cooperation with the national competent authorities of participating EU countries, within the framework of harmonized rules. The objectives are manifold: to break the vicious circle of banks’ distress and sovereign risk, that is, the probability that a government would refuse to honour their debt; to contribute to financial integration of the euro area and of the single market as a whole; to ensure enhanced supervision of Europe’s banks in accordance with their increased cross-border activities and ensuing inter-dependencies.

Since June 2012, when the Decision of the Council of the European Union was issued, the Bank of Italy has ensured full and continuous support to the project, making an independent and valuable contribution of proposals, resources, experience, and procedures to the new supervision framework.

The second topic chosen for the 2015 Europe Day is the cooperation in euro banknotes’ design, production, and circulation. It should be noted ← 17 | 18 → that also in this activity the contribution of the Bank of Italy is significant: to the production process, with 1.16 billion notes yearly printed in our country, accounting for 14 per cent of the total euro-area production; to the design process, with the new, strongly innovative €20 note of “Europa series”, that is due to enter in circulation in November 2015 and has been developed with the participation of Bank of Italy’s experts.


ISBN (Softcover)
Open Access
Publication date
2017 (November)
Monetary Unions Crises monétaires Union monétaire européenne European Monetary Union Euro
Bruxelles, Bern, Berlin, Frankfurt am Main, New York, Oxford, Wien, 2017. 324 pp., 1 ill., 2 tables

Biographical notes

Daniela Preda (Volume editor)

Daniela Preda is Full Professor at the University of Genoa and Jean Monnet Chair ad personam in "History of European Integration". Former president of the Associazione universitaria di Studi Europei (Italian section of ECSA), she is a member of the Scientific Board for the PhD program in "History" (University of Pavia). Her most important research interests concern the history of the European Community and the history of the federalist movements. She has published many books and essay, including: Storia di una speranza. La battaglia per la CED e la Federazione europea (Milan, Jaca Book, 1990); Sulla soglia dell’Unione. La vicenda della Comunità politica europea (1952-1954) (Milan, Jaca Book 1994); Alcide De Gasperi federalista europeo (Bologna, Il Mulino, 2004); Per una biografia di Mario Albertini: la formazione, la scelta europea e l'autonomia federalista (Jean Monnet Interregional Centre of Excellence, University of Pavia, 2014). She has co-edited, along with Daniele Pasquinucci, the following works published by Peter Lang: The Road Europe Travelled Along: the Evolution of the EEC/EU Institutions and Policies (2010); Consensus and European Integration: a Historical Perspective (2012); Communicating Europe: Journals and European Integration, 1939-1979 (together with Luciano Tosi, 2013).


Title: The History of the European Monetary Union