There has recently been sharp debate about that centerpiece of European Union (EU) planning, the European Monetary Union (EMU). In the run-up to the 1996 conference to review the EU's Maastricht Treaty--and leaving aside those who dislike the entire enterprise--three major schools of thought have emerged. One holds that not only a common market but even monetary union can be had without political unity. Monetary union, it is maintained, is a technical issue, designed to do away with exchange rate fluctuations, transaction costs for business, and other uncertainties. A new and independent European central bank could run such a regime, as independent central banks in Germany and the United States have done for decades, leaving political roles, including the management of national fiscal policies, unaffected.
Another view--strongly held, for instance, by Chancellor Kohl and in France--is that EMU is desirable for overriding political reasons, irrespective of formal political union. Once achieved, it will in any case promote further integration.
The third view--insisted on by the German Bundesbank--holds that if EMU is to succeed it must be accompanied by political union.
Two clusters of issues are involved here. One concerns the nature of the central bank and its independence, another the more technical issues of monetary management.