Odd man out: rethinking British policy on European monetary integration

2003 ◽  
Vol 29 (3) ◽  
pp. 341-364 ◽  
Author(s):  
Mark Aspinwall
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Alternative Explanation ◽  
Monetary Integration ◽  
Economic And Monetary Union ◽  
European Monetary ◽  
Economic Interests ◽  
Exchange Rate Mechanism ◽  
Opt Out ◽  
Rate Mechanism

This article examines British preferences on European monetary integration. It challenges dominant theories of preference formation, suggesting an alternative explanation focusing on governmental majority. Empirical evidence is presented on both UK economic behaviour and the views of domestic economic interests, as well as government majority. The article also analyses first and second-hand accounts of the main players involved in three cases: the decision not to join the Exchange Rate Mechanism in 1979, the decision to join the ERM in 1990, and the decision to opt out of stage 3 of Economic and Monetary Union.

ERM II

2020 ◽  
Author(s):  
Ulla Neergaard
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Euro Area ◽  
Economic And Monetary Union ◽  
Convergence Criteria ◽  
Member States ◽  
The Third ◽  
Exchange Rate Mechanism ◽  
Third Phase ◽  
Rate Mechanism

From the very beginning, an essential cornerstone of the Economic and Monetary Union (EMU) has been the European Exchange Rate Mechanism II (ERM II). It has been in force since 1 January 1999, ie from the initiation of the third phase of the EMU. Its overall purpose is to link currencies of Member States outside the euro area to the euro. Its importance lies in the fact that aspiring Member States must first join the mechanism for at least two years before being admitted as members of the euro area, as ERM II ‘membership’ is one of the four convergence criteria, which are required to be fulfilled for a Member State’s eventual adoption of the euro.

No, No, No

2020 ◽  
pp. 171-200
Author(s):  
Stephen Wall
Keyword(s):  
Exchange Rate ◽  
Monetary Union ◽  
Agricultural Policy ◽  
Common Agricultural Policy ◽  
Economic Liberalization ◽  
Economic And Monetary Union ◽  
Single Currency ◽  
Exchange Rate Mechanism ◽  
The Common ◽  
Rate Mechanism

Thatcher got less money back from her EEC partners than she had argued for but secured a lasting deal to replace endless yearly battles for refunds. Arguments over reform of the Common Agricultural Policy (CAP) continued. Thatcher championed economic liberalization in Europe, but was opposed to the Treaty changes needed to bring it about. She compromised and got most of what she wanted, at the price of accepting that economic and monetary union (a single currency) would be pursued. Her attempt at a closer relationship with Kohl and Mitterrand was rebuffed. The Bruges speech created shockwaves around Europe. Thatcher and Howe (Foreign Secretary until 1989) were at odds over Europe. He helped force her to agree to join the Exchange Rate Mechanism (ERM). Her stridency provoked his resignation from government and her downfall. Her policies and legacy tend to be caricatured.

One Foot In and One Foot Out, 1990–1997

2020 ◽  
pp. 201-226
Author(s):  
Stephen Wall
Keyword(s):  
Exchange Rate ◽  
Conservative Party ◽  
Maastricht Treaty ◽  
German Reunification ◽  
Exchange Rate Mechanism ◽  
Opt Out ◽  
The Uk ◽  
The Right ◽  
Rate Mechanism ◽  
The Eu

John Major had none of Thatcher’s reservations about German reunification and wanted to put Britain at the heart of Europe. But he faced growing Euroscepticism inside the Conservative Party. At Maastricht, Major secured for the UK the right to opt out or, later to opt in, to the proposed European single currency. The significance of this opt out for the longer term British sense of detachment from the rest of the EU was not then obvious. The ratification of the Maastricht Treaty in the UK, and the Major government, both nearly foundered, when the UK was forced out of the Exchange Rate Mechanism in 1991. Europe became a toxic issue in the Conservative Party. Mad Cow Disease triggered a policy of non-cooperation by the UK with the rest of the EU. Major championed the enlargement of the EU to include the newly freed countries of eastern and central Europe.

Europe's monetary malaise: international institutions and domestic policy commitments

1996 ◽  
Vol 22 (3) ◽  
pp. 257-273 ◽  
Author(s):  
Wayne Sandholtz
Keyword(s):  
Exchange Rate ◽  
International Institutions ◽  
European Monetary System ◽  
Central Banks ◽  
European Monetary ◽  
Exchange Rate Mechanism ◽  
Monetary System ◽  
The Uk ◽  
Belgian Franc ◽  
Rate Mechanism

A yearlong nightmare for the European Monetary System (EMS) began in September 1992. Amid name–calling, finger–pointing, and hand–wringing, the British pound and the Italian lira dropped out of the Exchange Rate Mechanism (ERM). In succeeding months, virtually every other ERM currency came under attack.1 Three of them—the Spanish peseta, the Portuguese escudo, and the Irish punt—devalued within the system. Three others—the French franc, the Belgian franc, and the Danish krone—avoided devaluation, but only at the price of recurrent and costly rounds of intervention by multiple central banks. Finally, in August 1993, the defenders of the parities surrendered. The twelve EMS countries agreed to expand the fluctuation margins from 2.25 per cent on either side of parity (6 per cent for Spain, Portugal and the UK) to 15 per cent on either side of parity. The wider margins eliminated the potential for speculative attacks, but left the system only the thinnest veneer of exchange rate coordination. This article seeks not to assess the causes of the crisis but rather to explain why the EMS governments did not defuse it with a realignment—the mechanism built into the ERM for precisely such occasions.

scholarly journals The Announcement of Unconventional Monetary Policy and the Exit Risk in the European Monetary Union

2018 ◽  
Vol 10 (4) ◽  
pp. 95 ◽  
Author(s):  
Paolo Canofari ◽  
Alessandra Marcelletti ◽  
Giovanni Piersanti
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
Monetary Union ◽  
European Monetary Union ◽  
Unconventional Monetary Policy ◽  
European Monetary ◽  
Opt Out ◽  
Union Model ◽  
The Stability

The introduction of unconventional monetary policy, pushing down the euro value, aims at strengthening the euro area, by increasing its competitiveness and boosting its economic growth. The goal of our paper is to offer a theoretical validation of these facts using a monetary union model in which a representative country and a common central bank strategically interact. The country can choose to stay in or opt out from the monetary union after a demand shock, while the central bank controls the exchange rate to preserve the stability of the union. Our main result is that the announcement of common exchange rate depreciation reduces the probability of a monetary union breakup.

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