"European Monetary Union: Post-Maastricht Perspectives on Monetary and Real Integration in Europe"

This paper analyzes the 1992 crisis in the EMS and raises the question whether EC monetary integration along the lines envisaged by the Maastricht Treaty is an efficient and viable way of monetary union. The challenge of the single market project for monetary integration is discussed and it is argued that an EMU is nonoptimal from the perspective of the Kenen criterion of economic diversification. Exchange rate instability is bound to affect real integration in the EC in a negative way and the growth effects of the single market program might be smaller than expected initially. The convergence criteria proposed in the Maastricht Treaty are only partly well founded and are likely to create serious conflicts of interest among EC members on the way to state III of EMU. From a German perspective the Maastricht proposals have[r] received increasingly weaker support from both the business community and the political system after German unification has turned out to be much more costly and more complex than anticipated initially.