None of these risks implies that the monetary union will inevitably be a victim of this severe economic downturn.

Stability and Prosperity in Monetary Union

Europe s monetary union has worked remarkably well.

Historically, monetary union was regarded as the route to political union.

EMU was designed to encourage structural reforms.

The difference, it was argued, was monetary union.

But this insight is not reflected in monetary union s design.

The crisis had moved from the monetary union s periphery to its core.

We spoke about European Monetary Union, but we didn t have it.

The EU s Economic and Monetary Union was a means to an end, not an end in itself.

But, again, liquidity provision alone without policies to restore growth soon would merely delay, not prevent, the breakup of the monetary union, ultimately taking down the economic trade union and leading to the destruction of the single market.

Some argue that the only way to save the euro is for monetary union to be followed by fiscal union.

Everyone understood that a monetary union would require enforceable fiscal and banking rules.

The overall economic performance of countries from the West African Monetary Union zone grew by only 2.8 per cent in 2004 against a projected growth rate of 4.1 per cent.

Ending the monetary union would end the European project itself, and wreak unmanageable havoc.

Completing its monetary union requires Europe to create a proper emergency financing mechanism.

Indeed, the Greek crisis exposed three main flaws in the monetary union itself.

Such a gulf within a monetary union cannot be sustained for very long.

That default will be due in large part to its membership in the European Monetary Union.

For reform laggards like France, Italy, and Portugal, currency union with an increasingly competitive Germany is forcing an unwelcome choice between revving up their own reforms and permanent stagnation.

Their message was simple national governments must make their economies fit for the strictures of monetary union the euro must be supported by deeper economic integration and a common currency needs political legitimacy that is, a polity.

EMU 2.0?

Monetary union without banking, fiscal, and political union has been a disaster.

None of these risks implies that the monetary union will inevitably be a victim of this severe economic downturn. But the downturn will be a more severe test for the euro than any that it faced during its first ten years.

He maintains that the Stability and Growth Pact contains all the rules that are necessary for Monetary Union to function.

Whether monetary union was necessary to accomplish that aim is debatable.

Adjustment in the United States monetary union occurs partly through labor mobility.

Meanwhile, as the crisis has deepened, a new consensus about Europe s monetary union has emerged.

The eurozone is gripped by an existential crisis that is slowly, but inexorably, destroying the monetary union s very foundations.

But that planned monetary union, until recently envisaged to be launched in 2009, has now been put on ice.

Other ideas, like moving to fiscal union, would require a fundamental revision of the EU s founding treaties.

Unfortunately, the eurozone s institutions lack the powers needed to defend the monetary union effectively.

The same is true of developments like the Union's common foreign and security policy or Monetary Union, with its Euro and European Central Bank.

China s intensive economic monetization is a key factor driving its money supply growth.

It is not that the end of European Monetary Union is on the agenda it is merely that people have begun thinking about possible low probability futures in which the end of EMU might be placed on the agenda.

Civil unrest and political destabilization could erupt into financial and social crises that ultimately threaten the monetary union s survival.

Indeed, that design gap has turned out to be a major source of the monetary union s current crisis.

Even lawyers are getting into the act, trying to identify legal responsibility for the monetary union s design flaws.

The EMU is evidence of that.

Until the late 1990 s and the advent of monetary union, most government debt in the European Union was domestically held in 1998, foreigners held only one fifth of sovereign debt.

The consequences have not been happy. Monetary union without banking, fiscal, and political union has been a disaster.

Given that financial integration is particularly strong within the monetary union, putting the ECB in charge was an obvious choice.

It won t succeed if some countries persistently run deficits and weaken their competitiveness at the expense of the euro s stability.

Europe learned the same lesson with the move to monetary union and the creation of the European Central Bank to manage its new currency, the euro.

Everybody accepted if grudgingly that the bare bones EMU was the only game in town.