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European Monetary Union

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  • Paul De Grauwe

Abstract

The introduction of the euro in 1999 is without any doubt one of the great achievements in the European integration process. In one bold stroke, national monetary sovereignty was abolished and transferred to a new European institution, the European Central Bank, that from then on became the guardian of the new currency.Until the eruption of the sovereign debt crisis there was a general perception that the euro zone was a great success. In 2008 the European Commission issued a report (euro@10; European Commission, 2008) that was unqualified in its praise about the achievements of the euro zone. Then came the sovereign debt crisis that has led many observers to reevaluate European Monetary Union (EMU). This article discusses its successes and failures, analyzes the fragility of EMU, and identifies two sources of this fragility. Finally, it discusses governance issues and the nature of the political institutions that will be necessary to sustain the European Monetary Union.

Suggested Citation

  • Paul De Grauwe, 2011. "European Monetary Union," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
  • Handle: RePEc:pal:dofeco:v:5:year:2011:doi:3859
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    Citations

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    Cited by:

    1. Valerio Filoso, Valerio & Panico, Carlo & Papagni, Erasmo & Francesco, Purificato & Vázquez Suarez, Marta, 2016. "Causes and timing of the European debt crisis: An econometric evaluation," MPRA Paper 75847, University Library of Munich, Germany.
    2. Carlo Panico, Francesco Purificato, Elvira Sapienza, 2015. "Benefici, problemi e prospettive dell’integrazione monetaria in Europa (Benefits, issues and future of monetary integration in Europe)," Moneta e Credito, Economia civile, vol. 68(271), pages 305-339.

    More about this item

    Keywords

    European Central Bank (ECB); European Financial Stability Facility (EFSF); European Stability Mechanism (ESM); euro; housing market; sovereign debt crisis; Stability and Growth Pact;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G1 - Financial Economics - - General Financial Markets

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