chapter  6
16 Pages

Is EMU sustainable?

In the last chapter we argued that a monetary union is sustainable if the aggregate benefits from being in the union exceed the costs of being unable to respond to shocks individually. We implicitly broadened the widely discussed question of who should join a monetary union and asked for the set of conditions under which a country might wish to leave the union. If these conditions were not fulfilled, European Monetary Union (EMU) would be sustainable.