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In Discussion Paper No. 1217, Research Fellow Barry Eichengreen
and Fabio Ghironi review the problems that must be resolved at
the Intergovernmental Conference in 1996 in order to clear the way for
EMU: overcoming the reluctance, mainly in Germany, to embrace the risks
and uncertainty of monetary union; and coming to terms with variable
geometry more systematically than the EU has been prepared to do to
date. Not all member states will agree to faster political integration
or to participation in an EU foreign policy, raising the problem of how
to coordinate the policies of participants with the rest. In addition,
not all countries will be ready for monetary union in 1999, posing the
same coordination problem in terms of monetary and exchange rate
policies. Issues such as monetary relations between EMS and non-EMS countries within the EU and implications for the dollar/ecu and yen/ecu exchange rates have rarely been systematically analysed or publicly debated. The authors suggest modest measures, such as making explicit provision for continuance of the EMS following the inauguration of Stage III of EMU, that can go some way towards addressing these problems. European Monetary Unification: The Challenges Ahead Barry Eichengreen and Fabio Ghironi Discussion Paper No. 1217, July 1995 (IM) |