Book

The Making of the European Monetary Union: 30 years since the ERM crisis

September 2022 marked the thirtieth anniversary of the Exchange Rate Mechanism (ERM) crisis, a seismic event which shook the continent and caused a severe recession to spread rapidly across European economies. To mark the occasion, CEPR organised a two-part webinar to reflect on the potential lessons from the crisis. These insightful discussions led to the creation of this eBook, which brings together eminent scholars and CEPR researchers who witnessed first-hand the fallout, both economic and political, of countries in the European Union. Many of the contributors have since been involved in managing, designing and debating the making of the European monetary system over the last three decades. The eBook discusses the origins of the crisis and frames it within a broader European historical and political perspective. It considers the underlying causes – German reunification, the struggle for monetary cooperation, the instability of a fixed exchange rate regime under capital mobility – which ultimately led to the breakdown of a flawed system. From disaster to revival, the eBook explains why the crisis was such a watershed moment for European economic policy formation and traces the growth and subsequent construction of a more robust European monetary system. It highlights how the trauma of the ERM crisis may have been the impulse needed to reinforce the ultimate adoption of a single, common currency in the form of the euro. In the following decades, the eBook shows how lessons from the crisis have remained pertinent, influencing theories of currency crisis and the development of instruments and institutions able to adequately respond to subsequent financial instability and debt crises. The final section reflects on the need for changes to further strengthen the institutional setup.

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Corsetti, G, G Hale and B Weder Di Mauro (eds) (2023), ‘The Making of the European Monetary Union: 30 years since the ERM crisis‘, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

Citation

Corsetti, G, G Hale and B Weder Di Mauro (2023), ‘The trauma of the European currency crises in the 1990s and its consequences until today‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

Citation

Eichengreen, B (2023), ‘Thirty years after the ERM crisis‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

Citation

Corsetti, G (2023), ‘Why is the European currency and financial crisis of the 1990s relevant today?‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Honohan, P (2023), ‘A small currency in the ERM zone of monetary instability‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Portes, R (2023), ‘The European Monetary System crisis of 1992‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Bean, C (2023), ‘The ERM crisis and the UK: Black or White Wednesday?‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Mann, C (2023), ‘The ERM crisis: A teachable episode for international macro‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Obstfeld, M (2023), ‘The backdrop of the ERM crisis‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Visco, I (2023), ‘Italy and the crisis of the European Monetary System‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Wyplosz, C (2023), ‘From 1999 (and before) to 2007: A decade of optimism or a lost decade?‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Rose, A (2023), ‘One good reason we were optimistic: The rise of inflation targeting and the demise of fixed exchange rate crises‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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De Grauwe, P (2023), ‘The end of euro area crises?‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Jeanne, O (2023), ‘A decade of crisis in the euro area: How can one reconcile price stability with a monetary backstop for government debt?‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Akinci, O and P Pesenti (2023), ‘When Europe catches a cold, the rest of the world sneezes: Global spillovers of the euro crises‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Bini Smaghi, L (2023), ‘Thirty years since the ERM crisis: The beginning of the end‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Lane, P (2023), ‘Lessons from the European Monetary System Crisis for European Monetary Union‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Sandbu, M (2023), ‘Thirty years on, new frontiers for Europe’s monetary cooperation‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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Zettelmeyer, J (2023), ‘The architecture of the euro: Prospects for the next decade‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis

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D'Amico, L, F Giavazzi, V Guerrieri and G Lorenzoni (2023), ‘Future challenges to European sovereign debt markets‘, in Corsetti, G, G Hale and B Weder Di Mauro (eds), The Making of the European Monetary Union: 30 years since the ERM crisis, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/making-european-monetary-union-30-years-erm-crisis