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The Currency of Ideas: Monetary Politics in the European Union. By Kathleen R. McNamara. Ithaca, NY: Cornell University Press, 1998. 185p. $39.95 cloth, $16.95 paper.
Monetary Politics: Exchange Rate Cooperation in the European Union. By Thomas H. Oatley. Ann Arbor: University of Michigan Press, 1997. 222p. $49.50.
Political Economy of Financial Integration in Europe: The Battle of the Systems. By Jonathon Story and Ingo Walter. Cambridge, MA: MIT Press, 1997. 337p. $25.00 paper.
Aspects of European Monetary Integration: The Politics of Convergence. By Alison M. S. Watson. New York: St. Martin's, 1997. 226p. $29.95 paper.
How can one explain the emergence and consequences of exchange rate cooperation and monetary union in the European Union? This, very broadly, is the question that unites these four books.
Story and Walter provide a highly detailed and exhaustively documented historical account of "the politics and diplomacy surrounding the EU's financial services area, exchange-rate regimes, and repeated attempts to make a big leap to monetary union" (p. 105). The first three chapters review the history of negotiations over the European financial services area (i.e., the creation of a single market in financial services) and monetary union politics in Europe, including efforts at exchange rate coordination and the macroeconomic imperatives associated with this. In my assessment, the key point of the book lies buried in the middle of chapter 2 (p. 42): It can be deduced from macroeconomic theories that once European states committed themselves to fixed exchange rates (essentially starting with the European Monetary System in 1979) the logical implication is much deeper economic and political union. The authors marshal a great wealth of detail to show how this dynamic has played out and that although the ultimate outcome (deeper union) is predictable, getting there is anything but simple, as member states, financial market actors, and central banks fight for their divergent interests.
To the credit of Story and Walter, they view monetary and exchange rate cooperation as part and parcel of the much broader process of integrating financial markets in Europe and, ultimately, the broad political project of European integration. Thus, chapters 4-8 are devoted to explaining the distinctive national financial market models-and, by extension, distinctive brands of capitalism-that exist in Europe (with separate chapters on France, Germany, and...