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The Road to Monetary Union in Europe: The Emperor, the Kings, and the Genies
Padoa-Schioppa is deputy director general of the Bank of Italy, that most cerebral branch of the government that has provided Italy with two technocratic prime ministers during the last five years. This book collects essays on European monetary developments that were written between 1982 and 1992, capped with an introduction that provides a superb overview of European monetary integration. The author was an important insider during the past decade and identified early what he calls the "inconsistent quartet" of free trade, free capital movements, fixed exchange rates, and autonomous national monetary policies, which cannot coexist in the long run. He foresaw that Europe would either have to go forward to eliminate autonomous national monetary policies through a monetary union, or else the other three elements would inevitably be eroded over time, leading Europe to drift away from a single market. He thus early became a thoughtful advocate of a single European monetary authority, although not necessarily from above, through a treaty. Once the Maastricht treaty emerged, he not surprisingly supported it vigorously, while not being unmindful of its flaws, particularly its substantial enlargement of the democratic gap in Europe.