Lessons for the Euro from History

Lessons for the Euro from History

Harold James
Julis-Rabinowitz Center for Public Policy and Finance Conference, „European Crisis: Historical Parallels and Economic Lessons, “ April 19, 2012

 

The makers of the Euro, and almost every analyst and commentator, assume that the creation of the single European currency was a major and novel experiment in building a non-national money, and thus that there were few if any lessons to be derived from any more remote historical experience. That deduction is not really valid, and there are some important lessons that may be drawn from the vast laboratory of historical experience, especially in regard to the need for rules, but also of flexibility in the implementation of monetary policy.
EMU, as discussed in the 1970s and 1980s, stood for Economic and Monetary Union. But the technical aspects went ahead of the political initiatives on European integration, with the result that there was imperfect agreement on crucial aspects of the monetary union, in particular fiscal rules and banking supervision and regulation. Both these issue areas raised political concerns about loss of national sovereignty and about the redistributional consequences of Europeanizing a fundamental part of economic policy-making. In consequence, the makers of the settlement looked back on a task that was only half accomplished. As former EU Commission President Jacques Delors put it in a recent interview, “the finance ministers did not want to see anything disagreeable which they would be forced to deal with.”

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