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EMU: An Italian perspective

Author

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  • Rainer Masera

    (G. Marconi University, Rome)

Abstract

The paper offers an Italian perspective on the creation and evolution of the European Economic and Monetary Union (EMU), which were and continue to be politically driven processes. European political leaders were responsible not for design defects but for a fundamental fault in execution: an original sin that continues to undermine the workings of the EMU. Contrary to commonly held beliefs, the Maastricht criteria and a rapid convergence process towards political union as the counterpart to the EMU were a viable framework. This consistent time path was not respected when the euro was created: the participation of Italy in 1999 and of Greece in 2001 did not satisfy the condition of prior fundamental convergence, notably in terms of public finance. The currency without a state, the lack of adjustment, and insufficient structural reforms imparted a deflationary bias, heightened the risks of the sovereign/bank nexus, and led to a wrong policy mix. In spite of significant steps to correct the system, current flaws continue to represent a major drawback to improving the resilience of the system.

Suggested Citation

  • Rainer Masera, 2019. "EMU: An Italian perspective," PSL Quarterly Review, Economia civile, vol. 72(288), pages 27-40.
    • Handle: RePEc:psl:pslqrr:2019:12
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    File URL: https://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/14794/pdf
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    References listed on IDEAS

    as
    1. Francesco Paolo Mongelli, 2008. "European Economic and Monetary Integration, and the Optimum Currency Area Theory," European Economy - Economic Papers 2008 - 2015 302, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    Cited by:

    1. Carlo D'Ippoliti & Maria Chiara Malaguti & Alessandro Roncaglia, 2020. "LÕUnione Europea e lÕeuro: crescere o perire," Moneta e Credito, Economia civile, vol. 73(291), pages 183-205.

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    More about this item

    Keywords

    Economic and Monetary Union; policy mix; Target2 balances; Euroexit;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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