Europe’s unfinished currency

‘A stimulating read, Dr Mayer’s book combines a concise historical narrative of the events leading up to the euro with an imaginative suggested new architecture for the EMU. Particularly interesting are his insights on how a breakup, should it occur, would evolve.’ — Alan Greenspan, former Chairman of the Federal Reserve Board ‘Thomas Mayer was years ahead in predicting Europe's economic and very political crisis. Now, he blazes a trail to stability, a path that leads to the politics and union of nineteenth-century America. This is a time of essays and short sound bites. 'Europe's Unfinished Currency' is a concise, crafted book that should be the template for all seeking the new political economics of Europe.’ — Tom Keene, Editor-at-Large, Bloomberg News ‘Thomas Mayer’s new book is an important intellectual contribution to the most pressing political and economic debate in contemporary Europe. Some of his suggestions are no doubt controversial, but he has provided a coherent argument in a discussion that will profoundly change the European unification process as we know it.’ — Henning Meyer, Senior Visiting Fellow, London School of Economics and Political Science The euro was originally seen as another stepping stone to a politically unified Europe, which in turn was seen as a guarantor of peace. With the fall of the Berlin Wall, the disintegration of the Soviet Union and the unification of Germany, the need for European political union as a means to ensure peace in Europe disappeared. Due to the fading will for full political union, the euro project lost the prospect of a stable platform in the foreseeable future, and the euro crisis (a result of the global credit crisis) is forcing policymakers to develop a new architecture for EMU. ‘Europe’s Unfinished Currency’ postulates that this can only be done by way of a currency union of sovereign states, as a political union is ultimately unrealistic. This in itself is a unique historical experiment, as no such union has ever survived to date. This volume offers ideas of how the EMU could potentially work, and sketches scenarios of how things might evolve in case of failure. Key Insights: Outlines the origins of the euro within the quest for the unification of Europe. Explains the historical failures of past monetary unions, including the Latin and Scandinavian currency unions, the US dollar standard and the Austro-Hungarian union. Posits that the European Central Bank in cooperation with a European Monetary Fund should act as the lender of last resort to all systemically important borrowers, including governments, to safeguard price stability. Proposes a new EMU architecture, which includes the creation of a European Monetary Fund. Discusses possible mutations of the EMU in case of failure.