Abstract
The Treaty of Rome makes no reference to monetary union or specific exchange rate arrangements. In 1968 Raymond Barre, then commissioner of the European Community (EC), wrote a proposal advocating tighter consultations of member governments concerning macroeconomic policy and in particular monetary policy. The celebrated Werner Report of 1970 was an outgrowth of Barre’s ideas. Although this report set monetary union as the ultimate EC objective, it was careful to emphasize (1) preconditions in the form of coordinated policies and (2) the establishment of narrower margins of fluctuations around exchange rate par values. The so-called snake arrangement, instituted in 1972, was believed to be the Werner Report in action. In fact, from the Werner Report the “snake” system borrows only the idea of reducing currency fluctuations without setting a machinery to coordinate policies. The “snake” failed.
Reprinted from Cato Journal 8 (Fall 1988): 477–501.
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Fratianni, M., Walters, A. (1989). The European Monetary System: How Well Has It Worked?. In: Dorn, J.A., Niskanen, W.A. (eds) Dollars Deficits & Trade. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-1288-0_11
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