Economic Review, Vol. 52 No. 11-12, 2001.
Original scientific paper
EUROPEAN MONETARY SYSTEM
Vinko Kandžija
Alen Host
Abstract
By introduction of unique European currency which represents a symbol of power of European economic sovereignty, EMU approaches functionalists-establishers of Community. Historically, it has never existed a long-lasting monetary union among large sovereign nations without strong political integration. EURO zone is a well-proved new international frame, original in every case, which has to be kept alive and evaluated, and must overcome tensions, conflicts and economic perturbations it will be faced with. Uknowns are numerous, and there are almost no retreats for evaluation of abilities and efficiency of new macroeconomic frame of euro-zone. Is it ensured coordination between national budgetary policies and between budgetary policies and unique national policy? Can European economic policy bring unaffected orientation? Which directives to fix inunique monetary policy if there are significant divergences of growth rates and inflation of member countries? Is it sufficient to charge national budgetary policies with stabilization? Do market mechanisms ensure stability in absence of central budget? After the years of experience it is simply possible to establish that heterogeneity of market among eleven is more significant in the period before EMU, behavior of EURO toward USD is weaker than initially shown, while stabilization pact shows small contraction due to very favourable market character. Long-lasting discussions on economic convergence are directed toward structural reforms which will ensure stability to new union for a long-term. If unique currency is expected to favour the integration of commodity and capital market, and not labour market, than organization of labour is deeply affected. Competition among European countries shifts currency towards competitiveness of general socioeconomic system which directly interpolates in creation of “Social Europe”.
Keywords
Hrčak ID:
28783
URI
Publication date:
20.12.2001.
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