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This article provides an overview of recent research into the macroeconomic costs and benefits of monetary unification. We are primarily interested in Europe's monetary union. Given that unification entails the loss of a policy instrument, its potential benefits have to be found elsewhere. Unification may serve as a vehicle for beneficial institutional changes. In particular, it may be a route toward an independent monetary policy, which alleviates the scope for political pressure to relax monetary policy. Unification also eliminates harmful monetary policy spillovers and competitive devaluations. We explore how disagreement between the monetary and fiscal authorities about their policy objectives can lead to extreme macroeconomic outcomes. Further, we pay considerable attention to the desirability (or not) of fiscal constraints and fiscal coordination in a monetary union. Monetary commitment and fiscal free riding play a key role in this regard. Similar free-riding issues also feature prominently in the analysis of how unification influences structural reforms. We end with a brief discussion of monetary unification outside Europe. The cost—benefit trade-off of unification may differ substantially between industrialized and less-developed countries, where differences in fiscal needs and, hence, the reliance on seigniorage revenues may dominate the scope for unification.

This article traces the complex path that Martin Feldstein followed, for more than twenty years, in his principled critique of the European common currency project. Involved in the debate on the euro from its early stages to the tumultuous times of the sovereign debt crisis and the resulting recession, author of numerous articles in the academic and popular press, drawing his arguments from economics and political economy, he contributed to the development of an American vision on monetary unification in the EU. Studying this extended body of literature proves to be an interesting way to explore the sinuous discussion on the euro from the theoretical, applied and public-debate perspectives.

The European project of monetary unification is under threat as never before. It is, therefore, high time to point out what went wrong and what should be done to reform the Eurosystem accordingly. This paper shows that Euro zone member countries are de facto still lacking a single currency and a monetary system that would allow for the final payment of cross-border transactions. Starting from the RTGS mechanism adopted by the Eurosystem and from a comparison with the working of domestic payment systems, it describes the changes required to transform the ECB into a bank of central banks capable to guarantee the existence of a true system of intra-European payments, with or without a single European currency (that is, with or without the loss of Euro zone countries’ monetary sovereignty)

The first official endeavours to bring about European monetary union were made when the system of fixed exchange rates was on the verge of collapse; in the intervening years the situation has hardly been more favourable than at the outset. Recently, however, things have started to look up again. While the dangers with which the world economic outlook is fraught point, no less clearly than in the past, to the crucial role of monetary unification for the survival of the Community, the difficulties which stand in the way of unification now seem to be less forbidding. The present paper draws attention to developments in the world economy and in EEC member countries that seem to justify this. In addition, some specific steps are suggested that would advance monetary unification. JEL: F36, F31, E43

This paper proposes a quantitative assessment of the welfare effects arising from the Common Monetary Area (CMA) and an array of broader grouping among Southern African Development Community (SADC) countries. Model simulations suggest that (i) participating in the CMA benefits all members; (ii) joining the CMA individually is beneficial for all SADC members except Angola, Mauritius and Tanzania; (iii) creating a symmetric CMA-wide monetary union with a regional central bank carries some costs in terms of foregone anti-inflationary credibility; and (iv) SADC-wide symmetric monetary union continues to be beneficial for all except Mauritius, although the gains for existing CMA members are likely to be limited.

Many argue that the crisis of the international monetary order founded at Bretton Woods is acting as a catalyst in the process of European monetary unification. Others, however, argue that the mounting disorder into which the Bretton Woods order has drifted is hampering that process and that, sooner or later, it will wreck the whole E.C. construction. The present article assess the international currency problem with regards to European integration, showing that it is probable that each of the arguments put forth have valid points. The author argues that the frictions produced by the process of reform have put a strain on international economic and monetary cooperation just when it needed to be strengthened in order to meet new challenges. Moreover, the repeated efforts to restore the monocentric reserve-currency system and the all round obligation to maintain fixed exchange rages are misdirected endeavours.   JEL: E42, F36, F33

In ifo Schnelldienst 10/2013 two articles focused on the study jointly published by the Bertelsmann Foundation and Prognos entitled: \"The Advantages of Monetary Union for Germany\". Both articles offer a critical discussion of the methods used in the study, as well as conclusions drawn from an analysis of it. In this article Michael Böhmer, Prognos AG, and Thieß Petersen, Bertelsmann Stiftung, give their views on this criticism. [PUB ABSTRACT]

This article investigates currency iconography as an indicator of the content of collective identities in Europe. Using an original database of the human figures on European paper money since the 19th century, the article finds a combination of iconographic similarity across space and iconographic difference across time. This finding suggests that rather than using the currency to indoctrinate the public with a set of specifically national values, European state elites have traditionally tried to use the currency to enhance their public legitimacy by embracing the values currently fashionable in pan-European society. The article then draws out the implications of this argument for understanding the iconography of the euro and the prospects for a European ‘demos’.