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ENDNOTES

  1. In practice, though, a country may try to exert political pressure through its ECB representative.
  2. Under this scheme, governments allow exchange rates to float within prescribed limits before they intervene. Under a fixed exchange rate regime, in contrast, governments define the exchange rate and intervene in the market when necessary to maintain it.
  3. See Endnote 1.
  4. Of course, the countries differ more dramatically in politics than economics, but that is not the focus of this article. For a more complete list of the treaty's convergence criteria and country performance, see Deutsche Bundesbank (1998).
  5. Although minimum wages are in force in the United States, they affect only a small percentage of the work force.
  6. This does not even take into account the cultural, ethnic and language differences.
  7. The Maastricht Treaty allows the range to broaden somewhat during a recession, but not substantially.
  8. The U.S. Federal Reserve also cannot target monetary policy to a particular region, although monetary policy can affect different regions of the country differently.
  9. Opting out would be a costly proposition for any country, however, since all euro-denominated debts and accounting systems would have to be converted back to the reintroduced currency.
  10. These trade figures exclude intra-EU trade among member nations.

REFERENCES

Bergsten, C. Fred. "The Dollar and the Euro," Foreign Affairs (July/August 1997), pp. 83-95.

"Can One Size Fit All," Economist (March 28, 1998), p. 74.

Capell, Kerry. "What a 'Euro' Could Do for the Latins," Business Week (April 13, 1998), p. 100.

Crawford, Malcolm. One Money for Europe? The Economics and Politics of EMU (New York: St. Martin's Press, 1996).

Deutsche Bundesbank. "Opinion of the Central Bank Council Concerning Convergence in the European Union in View of Stage Three of Economic and Monetary Union" (March 26, 1998).

Dornbusch, Rudi. "Euro Fantasies," Foreign Affairs (September/October 1996), pp. 110-24.

"EMU," Economist, Survey (April 11, 1998).

The European Union. "Facts and Figures on the European Union and the United States," www.eurunion.org/profile/facts.htm (April 2, 1998).

Goodhart, C. A. E. "The Transition to EMU," Scottish Journal of Political Economy (August 1996), pp. 241-57.

Pollard, Patricia S. "EMU: Will It Fly?" Review, Federal Reserve Bank of St. Louis (July/August 1995), pp. 3-16.