Discussion of Chapter 3

George Zis, in this useful chapter tracing the political and economic background to the European Monetary System (EMS), argues (a) that the exchange rate regime was an unexpected success, but (b) that the underlying political commitment was such that success should have been anticipated. He goes on to pose the question whether similar mistakes are now being made, for similar reasons, about the prospects for EMU. I would see this argument (in terms of description, although not prescription) as firmly in what used to be called the ‘Monetarist’ as opposed to the ‘Economist’ camp. In the context of monetary integration the so-called ‘monetarists’ believed that it was possible to put the cart before the horse. The horse of technical detail and of political and institutional change would follow once the cart of EMU was in place. Political acts with political commitment would force the pace.