Beyond Emu: The Problem of Sustainability

Abstract

A common currency, as envisioned in the Maastricht treaty, is thought to be the surest way to "lock in" commitments to monetary cooperation among sovereign states. But historical evidence suggests otherwise. Comparative analysis of six currency unions demonstrates that while economic and organizational factors are influential in determining the sustainability of monetary cooperation, interstate politics matters most. Compliance with commitments is greatest in the presence of either a locally dominant state, willing and able to use its influence to sustain monetary cooperation, or a broad network of institutional linkages sufficient to make the loss of monetary autonomy tolerable to each partner. Copyright 1993 Blackwell Publishers Ltd..

Monetary governance in a world of regional currencies (2003)

“…In the EAC, as I have noted elsewhere (Cohen 2000a), decolonization left little feeling of solidarity among the three constituent members, despite their legacy of common services and institutions. Much more influential was a pervasive sensitivity to any threat of encroachment on newly won sovereignty, which raised the perceived cost of currency unification (elevating MA).…”

The Breakup of the Euro Area

“…And even if there are immediate economic benefits, there may be longer-term economic costs, and political costs of an even more serious nature. Still, as Cohen (2000) puts it, "In a world of sovereign states….nothing can be regarded as truly irreversible." Policy analysts should engage in contingency planning, even if the contingency in question has a low probability.…”

“…Concretely, the EU has made some progress in the requisite 33 The same was true of, inter alia, Spain and Finland according to the indices of Hallerberg and Wolff (2006). 34 An earlier attempt to ask these same questions is Cohen (2000). 35 Supplemented by measures to enhance the flexibility of real and nominal wages.…”

Stability of Monetary Unions: Lessons from the Break-up of Czechoslovakia

“…Dornbusch (1992), Garber and Spencer (1994), and Cheikbossian (1995) look at the breakup of the Austro-Hungarian Empire and draw lessons for the then ongoing breakup of the Soviet Empire and currency reforms. Cohen (1993) looks at the sustainability of monetary unions based on a comparative analysis of six historical examples of monetary integration. 5 He discusses economic, organizational, and political factors, and identifies the last group as those most instrumental for the sustainability of monetary cooperation among sovereign governments.…”