From ERM to EMU: EC Monetarism and Its Discontents
The treaty of Maastricht signed by twelve member-states in 1992 established the Economic and Monetary Union (EMU) with a single currency controlled by an independent European Central Bank (ECB) and the exclusive aim of price stability. It established strict convergence criteria for membership in terms of national rates of inflation, budgetary deficits and debt. The stability and growth pact of 1996 set a deficit limit of 3 percent sanctioned by a fine of up to 0.5 percent of GDP in order to preserve the value of the Euro. The statutes of the ECB were modeled on those of the Bundesbank with an assured majority of German monetary satellites and prohibition of attempts of national governments or politicians to influence it from the outside.
KeywordsInterest Rate European Central Bank Monetary Union Price Stability Single Currency
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