The Euro and its history E-Book

Stefan Schäfer

• Herausgeber: Kohlhammer Verlag
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 393

Veröffentlichungsjahr: 2025

Beschreibung

With their common currency, the Europeans embarked on an experiment in 1999 that is unique in the history of money. It was preceded by numerous attempts to complement the advancing political integration since the 1950s with monetary integration. Today's currency union does not mark the end of this development. As long as the economic policies of the member states do not better support the ECB's monetary policy, European capital markets remain fragmented, and key EU members refrain from adopting the euro, this historic project remains incomplete.

Leseprobe

Ann-Stephane Schäfer/Stefan Schäfer/Cory Wanek

The euro and its history

An economic introduction

Verlag W. Kohlhammer

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First edition 2025

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Print edition:

ISBN 978-3-17-043544-5

E-Books:

pdf: ISBN 978-3-17-043545-2

epub: ISBN 978-3-17-043546-9

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Table of contents

Cover

Preface

1 Introduction: national money and international trade – a simple thought experiment

1.1 Money and its functions

1.2 International trade and the balance of payments

1.3 Foreign exchange market and currency system

1.4 The design of the international monetary system

2 Background: The long road to the euro (1945–1989)

2.1 A new start after the war: Bilateralism, European Payments Union and the Treaty of Rome

2.1.1 The years of so-called ‘bilateralism’

2.1.2 The European Payments Union

2.1.3 The “Treaty of Rome”

2.2 Western Europe’s currencies in the Bretton Woods era

2.2.1 The gold-dollar standard – an overview

2.2.2 How can fixed exchange rates be achieved?

2.2.3 The EEC currencies in the Bretton Woods system

2.2.4 The trilemma of monetary policy

2.2.5 From the mid-1960s onwards: Problems and collapse

2.3 The 1970s: the Werner plan and the ‘European Currency Snake’

2.3.1 The Werner plan: Creating an EC monetary union by 1980?

2.3.2 The ‘European Currency Snake’

2.4 The European Monetary System (EMS)

2.4.1 Objectives, functioning and development over time

2.4.2 Analyzing the EMS from the perspective of economic history (1): Was it a success story?

2.4.3 Analyzing the EMS from the perspective of economic history (2): Was it a Deutschmark bloc with the Bundesbank as its central bank?

2.4.4 Analyzing the EMS from the perspective of economic history (3): Was it a precursor to the monetary union?

3 Paving the way: Delors Report, Maastricht Treaty, Stability and Growth Pact (1989–1998)

3.1 The Delors report

3.2 Economic foundations of the discussion in the 1990s

3.2.1 The theory of optimum currency areas

3.2.2 Endogeneity of the functional conditions of a monetary union?

3.2.3 The political economy perspective

3.2.4 Monetary policy and public debt in a currency union

3.3 The Maastricht Treaty

3.3.1 The ECB as a ‘European Bundesbank’?

3.3.2 The convergence criteria

3.4 The Stability and Growth Pact

3.5 Decisive steps on the road to monetary union

3.6 The ECB formulates its strategy

4 Honeymoon: The euro before the financial crisis (1999–2007)

4.1 The ECB stands the test – and adapts its strategy

4.2 Greece, the Stability and Growth Pact, and international imbalances – dark clouds on the horizon?

5 Crisis years: The monetary union on the brink of collapse (2008–2015)

5.1 From the global financial crisis to the European sovereign debt crisis

5.2 Dimensions of the euro crisis

5.2.1 The euro crisis as a current account crisis

5.2.2 The euro crisis as a banking crisis

5.2.3 The euro crisis as a sovereign-debt crisis

5.3 The discussion about the institutional causes of the crisis

5.4 The ‘rescue packages’, the European Stability Mechanism (ESM) and the crisis year 2015

5.5 The reform of the eurozone architecture

5.5.1 Overview of the main features of the discussion

5.5.2 The reorganization of the fiscal and economic policy rules

5.5.3 The reform of the financial architecture

6 ‘The only game in town:’ The ECB in charge of everything? (2015–2022)

6.1 Overview: The evolution of the ECB’s monetary policy since the start of the financial crisis

6.1.1 The ECB’s response to the problems on the banking market

6.1.2 The ECB’s response to the sovereign debt crisis

6.1.3 “Whatever it takes”

6.2 Quantitative Easing

6.2.1 The Asset Purchase Programme

6.2.2 Criticism of the government bond purchases

6.3 The monetary policy response to the Covid pandemic

7 Present and future

7.1 Inflation is back

7.2 The 2021 revision of the ECB’s strategy

7.3 Is the ECB operating under conditions of fiscal dominance?

7.4 The “NextGenEU” program and the future of fiscal policy in the monetary union

7.5 A ‘digital euro’?

7.6 When will the eurozone be complete?

Literature

Buchnavigation

Inhaltsübersicht

Cover

Textanfang

Impressum

Preface

Since its introduction on January 1, 1999, the euro has become the money more and more Europeans use to make payments. In the beginning, the monetary union involved just under 300 million inhabitants in eleven countries, but the single European currency has grown to be used in twenty member states with around 350 million inhabitants today. To this end, the participants in the monetary union have ceded their responsibility for monetary policy to one supranational institution that is responsible for the euro, namely the European Central Bank (ECB). Since the creation of the monetary union, the eurozone countries have thus been ‘moneyless,’ and the euro and the ECB are in a sense ‘stateless.’ In the history of money, this has never been the case before. It is therefore no exaggeration to call the euro a unique experiment.

This book aims to trace how this experiment came about and how it has developed over the past decades. It differs from the vast number of publications dealing with the European single currency in the following respects:

The euro did not appear out of thin air, neither in 1999 nor during the famous Maastricht Conference in 1991. This book provides a detailed account of the euro’s extensive prehistory, tracing back to the end of World War II – an aspect often overlooked in existing literature.

Many articles dealing with the European currency reflect a particular point of view. In contrast, this book strives for a more balanced view by presenting different perspectives. The aim is to enable readers to understand the pros and cons of the decisive stages that the European monetary integration has gone through from its beginnings in the 1940s to the present day.

Unlike most publications on the subject, “The Euro and its History” takes an explicitly interdisciplinary perspective. In particular, it is written for a lay readership with a background in history, political science, law or cultural studies as well as for economists who are interested in historical developments.

Although the book reflects an economic perspective, it does not apply the usual economic methodology. Instead, the central relationships are explained verbally and with the help of clear graphics. Also, the book starts with an introduction that uses a thought experiment to introduce the fundamental relationships of international macroeconomics. While the foundational concepts outlined in this introductory chapter may offer basic orientation for some readers, those seeking a more in-depth exploration of the euro’s (pre-)history are encouraged to proceed directly to the subsequent chapters.

The authors are deeply grateful to Lisa Baker for taking the time to read the manuscript and for offering thoughtful feedback that helped shape this book.

Limburg and Milwaukee, June 2025

Ann-Stephane Schäfer Stefan Schäfer Cory Wanek