EURECON is a research project (2017-2023) financed by €1.5 million Starting Grant from the European Research Council (ERC).
It is often said that the euro has faults of conception. But how did this happen? How was the euro made in such a way that it nearly completely overlooked some critical aspects of monetary unions? The assumption is that in the run-up to the 1992 Maastricht Treaty, European policymakers just did not think properly about how to make the Euro work. Was this really the case? Did European policymakers really overlook the economic foundations of European monetary union?
The goal of the EURECON project is to explore European policymakers’ views about how to make the organisation of the European Economic Community (EEC) fit for the creation of a single currency, from 1957 to 1992. The project will look at the origins of the issues that are currently bedevilling the EU by investigating the period between the creation of the EEC in 1957 and the decision to create a European single currency in 1992.
Scholars and policymakers alike regularly recognise that the economic foundations of monetary union were inadequate. But the literature generally assumes that European policymakers just did not think carefully about the economic dimension of European monetary union.
The EURECON project starts from the opposite standpoint. EURECON will look at the proposals to develop economic integration as a means to improve the functioning of the EEC as a possible currency area. The project aims to examine these debates and proposals, understand the reasons for their success or failure, identify the dynamics of political and economic trade-offs and compromises, shifting priorities, and alternative approaches that were abandoned at the time but recycled later.
EURECON will span over 60 months. The project will focus on 5 Work Packages, and constitute a prosopography of the policymakers involved in the discussions:
The possibility of future European monetary unification prompted concern over divergent and often contradictory member states’ national economic policies. Such different national economic policies could increase the disparity in economic performance between member states, in particular in terms of inflation, output, and trade balance. These imbalances would undermine the overall cohesion of the currency zone. The need to better coordinate, if not synchronise, macroeconomic policymaking at the European level was thus a recurrent topic of discussion ever since the 1950s.
Regional disparities in economic development require the development of fiscal transfers at EEC level in order to stabilise a possible future single currency area. This is a common feature of monetary unions and is designed to help the economic area to better respond in the event of external economic shocks. The project will thus identify and analyse the proposals set out in this field, as well as the, pros and cons of these plans.
The Treaty of Rome contained provisions for the free movement of capital that some member states were reluctant to implement. This strand of the project will examine why some governments strongly opposed the liberalisation of capital movements, and how the shift in economic philosophies progressively occurred in the late 1970s-early 1980s in the run-up to the Single European Act. An important objective of this strand is to embed the analysis in the wider, global reflections on capital movements that took place at the Bank for International Settlements (BIS), in the International Monetary Fund (IMF).
A logical corollary to the development of capital market integration is the question of monitoring financial activities on the basis of common rules across the EEC. If capital could flow more freely across borders and banks could operate in several member states, who should then regulate/supervise what and where? As in the case of strand 3 on capital market integration, a critical dimension of the study will be to frame European developments in the wider context of the evolution of international banking regulation and supervision, in particular at the Basel Committee of Banking Supervision (BCBS) in the BIS.
The establishment of a common/single market is enshrined in the Treaty of Rome as the EEC’s main policy goal. The idea was that reducing tariff (common market) and then non-tariff (single market) barriers to trade would reduce costs for businesses, enhance productivity, and generate a net welfare gain, in that they would diminish administrative formalities, increase transparency and harmonise standards.
The project will consider all available primary archival sources from all member states over the 1957-1992 period related to these 5 work packages.
PhD and Postdoctoral Researchers will focus on the role of non-state non-EEC actors and factors influencing European policymaking within the context of EEC economic integration. The PhD/Postdoc projects will undertake specific case studies in the following four areas:
- commercial banks,
- big business,
- trade unions,
- and the spread/influence of economic ideas on the evolution of European economic cooperation and integration