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Realigning Interests: Crisis and Credibility in European Monetary Integration
By Michele Chang
Palgrave Macmillan, 2004, 224 pp.
This short book, an outgrowth of a dissertation, focuses on the political dimension of the European Monetary System (EMS). Introduced by eight countries in 1979, the EMS terminated in 1999 with the introduction of the euro, although a variant has been revived for Denmark, Sweden, and the ten new EU member states. Special attention is paid to the exchange-rate commitments, the domestic factors that influenced exchange-rate realignments between 1979 and 1987, and the financial crisis and breakdown of the EMS in 1992. Italy, Germany, and especially France get the heaviest treatment. Europeans sought exchange-rate credibility by joining a formal international agreement (first the EMS, then the Maastricht Treaty). Given the support for pan-European cooperation by many parties across the political spectrum (excluding the communists in France and Italy), traditional left-right partisan politics played less role in exchange-rate policy than might have been thought. But political disagreements on the wisdom of Maastricht, especially after the negative Danish referendum cast doubt on its viability, played a big role, as did macroeconomic policy dilemmas within the largest countries, France and Germany.
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