Abstract
In the literature on European monetary integration Germany and Italy are mostly strongly contrasted. However, this paper argues that there were important similarities between the policy paradigms in these two countries, in particular if a broader historical perspective is adopted. This work analyses the policy paradigms towards European monetary integration in Italy and Germany. Moreover, it contextualises these paradigms into the national institutional setting: while Germany was characterised by power sharing institutions, Italy featured power fragmentation (something which also affected the economic performance of both countries). There were significant differences between the policy paradigms of foreign policy-makers and economic policy-makers. Foreign policy makers, in both countries, under the influence of a European federalist vision, were strongly in favour of European monetary integration. These beliefs of foreign policy decision makers were crucial in charting EMU policy at history-making moments. The pro EMU policy paradigms of foreign policymakers contrasted, during most of the period covered, with the more sceptical beliefs of economic policy makers. In both countries, economic policy-makers, at different moments, had doubts whether enough “convergence” had been reached to make a more stable exchange rate system sustainable.
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Notes
Art 65 of the basic law “the chancellor determines and bears responsibility for the general guidelines of governmental policy. Within this policy, each minister conducts the affairs of his department independently and under his own reasonability. The government decides on the differences of opinion between ministers.”
In the post-war period Italy had more than 50 governments but only five governors of the Banca d’Italia.
At the ensuing meeting of the Committee of Governors, the president, Hubert Ansiaux of the National Bank of Belgium, remarked that it was dangerous to discuss these issues in public without prior consultations among the central banks (ECB, Minutes of the 31st Meeting of the Committee of Governors of 8 June 1969). At the same meeting also Otmar Emminger of the Bundesbank had to answer to questions concerning declarations of the German Finance Minister and argued for more exchange rate flexibility.
The social changes in Italy with the “hot autumn of 1969” were not only more extensive and pervasive than in other countries (e.g., terrorism with the Red Brigades), but also lasted much longer (Allum, 2000: 27).
A word of caution is required. For example, in 1978 the Italian Communist Party voted against Italy’s joining the EMS and the Italian Socialist Party abstained.
The German representatives in the Werner Committee were much less in favour of a European Reserve Fund as the Chancellor.
Moreover, several policy-makers, also at the Banca d’Italia, hoped that Great Britain would join, so that the lira would be less isolated.
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Acknowledgements
The authors would like to thank all those who contributed to this project, especially the many persons with whom the authors had fascinating and illuminating discussions as well as the persons who commented on earlier drafts, especially J.-P. Abraham and the participants at the 2005 UACES annual conference. The usual caveats apply.
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Maes, I., Quaglia, L. Germany and Italy: conflicting policy paradigms towards European monetary integration?. Constit Polit Econ 17, 189–205 (2006). https://doi.org/10.1007/s10602-006-9001-1
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DOI: https://doi.org/10.1007/s10602-006-9001-1