The Economics of Monetary Unions

Juan E. Castañeda is Director of the Institute of International Monetary Research and a Senior Lecturer in Economics at the University of Buckingham. He has worked with the European Parliament’s Committee of Economic and Monetary Affairs and has been an Honorary Senior Visiting Fellow in Cass Business School, visiting researcher at the Centre of Monetary and Financial Alternatives at Cato, and lecturer at UNED University in Madrid. He is a member of the IEA’s Shadow Monetary Policy Committee. Alessandro Roselli is a visiting fellow at Cass Business School, City University, London and at the University of Buckingham, UK. He has spent most of his career at the central Bank of Italy and has been A.C. Jemolo fellow at Nuffield College, University of Oxford. He has written extensively on banking, finance and economic history. Geoffrey E. Wood is Professor in Monetary Economics, University of Buckingham and Emeritus Professor in Economics, Cass Business School. He has lectured in Economics at the University of Warwick and in Banking and Finance at City University, London, where he has been Professor since 1986. He worked at the Bank of England as Economist, and later as Special Adviser on Financial Stability.

1 Introduction PART 1 Lessons from previous currency and monetary unions 2 The flexibility of the classical gold standard (1870s–1914): any lessons for the eurozone? 3 A measurement of asymmetry in the running of the classical gold standard PART 2 Financing imbalances in a single monetary area: an assessment of TARGET2 4 Payment systems in a multinational currency union – is a reform of TARGET2 necessary? 5 The credit mechanics of monetary unions: a review of the eurosystem PART 3 When may monetary unions fail? 6 Pros and cons of being a euro country: a behavioral political economy perspective 7 An optimality index of the single currency: internal asymmetries within the eurozone since 1999 PART 4 Preserving unions: the eurozone 8 Public support for the euro and trust in the ECB: the first two decades of the common currency 9 Debt restructuring for the eurozone 10 The rationale for a safe asset and fiscal capacity for the eurozone PART 5 The eurozone: not just a monetary union? 11 Can the euro succeed without European political union? The organizational challenges facing a multi-government monetary union in the "managed currency" era 12 Proposals for reforming the eurozone: a critique