Part VI Monetary Unions and other Forms of Monetary Organization, 25 Historical Background to EMU

Subject(s):

Eurozone — Monetary obligations — Institutional framework of monetary union

This chapter traces the history of the European Monetary Union (EMU). The Treaty establishing the European Economic Community was signed by the six original Member States on 25 March 1957. Under Article 2 of the Treaty, the objective of the Community was ‘to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it’. This objective was to be achieved ‘by establishing a common market and progressively approximating the economic policies of Member States’. Against the background of the Treaty framework, it is apparent that monetary union is principally concerned with the free movement of capital and payments and the conduct of economic policy throughout the Member States. The chapter then looks at the Werner Report, the establishment of the European Monetary System (EMS), the Single European Act in 1986, the Council Directive 88/361, the Delors Report, and the Treaty on European Union.