Alice in Euroland

Abstract

The article contains a detailed critique of the common currency arrangements of the Economic and Monetary Union, embodied in the laws and emerging procedural arrangements that govern the actions of its key institutions: the European Central Bank and the European System of Central Banks. The main message here is, 'Great idea, shame about the execution'. A number of improvements are then proposed. Some of these require amending the Treaty, including an end to the rule that each EMU member's national central bank has a seat on the Governing Council or the removal of the power of the Council of Ministers to give 'general orientations' for exchange rate policy. Others, notably in the areas of accountability, openness and transparency, could be implemented immediately, including publication of voting records, minutes and the inflation forecast. Improved arrangements are also advocated for the co-ordination of monetary and fiscal policy. And the article calls for a European Parliament that can both bark and bite.

Economic, Political, and Institutional Prerequisites for Monetary Union Among the Members of the Gulf Cooperation Council

“…In the EU, the European Commission has only a tiny budget amounting to about one percent of EU GDP, yet this is no obstacle to Buiter (1997Buiter ( , 1999Buiter ( , 2005Buiter ( , 2006a and Buiter and Sibert (2006a,b)). I will only state my main conclusions here.…”

The timing of central bank communication

“…Blinder (1998) and Bernanke (2004) emphasise the importance for communication as a means for central banks to influence these asset prices, provided that the central bank has acquired a credible reputation. In that respect, communication is an important tool for the effectiveness of monetary policy implementation (Buiter 1999, Eijffinger and Hoeberichts 2004, Issing 2005. It is important that communication manages to influence the expectations of economic agents, such that the desired reaction of longer-term interest rates is achieved.…”

Euro Area Enlargement and European Central Bank Reform

“…This work contributes to the literature focusing on the efficiency of monetary policy making and the coherence of monetary policy making for economically diverse states -including Deutsche Bundesbank (2001), de Grauwe (2000, EP (2001) and Gros and Hefeker (2000). To this can be added the literature on the legitimacy of the existing decision making structures of the ECB, including Buiter (1999), de Haan and Eijffinger (2000), de Haan et al (2005), ECB (2002), Issing (1999 and Leino (2001). Heisenberg (2003) attempts to bridge discussions about efficiency, transparency, enlargement and democratic legitimacy.…”

“…1 Prior to this agreement, there was a growing literature on the manner in which enlargement should / might affect ECB decision making institutionally including Berger (2002), Buiter (1999), Baldwin et al (2001a, b), Bjorksten (2000), Eichengreen and Ghironi (2001), Fatum (2000) and de Grauwe (2000). This work contributes to the literature focusing on the efficiency of monetary policy making and the coherence of monetary policy making for economically diverse states -including Deutsche Bundesbank (2001), de Grauwe (2000, EP (2001) and Gros and Hefeker (2000).…”