Monetary aspects of European integration

Quarterly Bulletin 1992 Q2
Published on 01 June 1992

The Governor argues that economic and monetary union has been made conceivable, and the Maastricht agreement possible, by the emergence over the last decade of a consensus within Western Europe on the overriding importance of price stability. Among other things, the determined pursuit of anti-inflationary policies will be essential if monetary union is to be viable; but, although the convergence criteria are achievable, they will by no means be easy or straightforward. The eventual shape of monetary union will depend on a number of issues which remain to be resolved, including the detailed institutional structure, the mechanisms for formulating monetary policy and the techniques used. In particular, the Governor raises a number of questions about the likely suitability of monetary targets. He goes on to stress that, once achieved, monetary union will live up to the hopes placed in it by EC leaders only if the peoples and politicians of all member states accept the importance of price stability and set fiscal and exchange rate policies which are consistent with this.

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