ABSTRACT
Fixingexchangerateseliminatestheirvariability,andthatiswhatenterprisesthatareinternationallyactivelookfor.Thisistheargumentoftheprecedingchapter.Thesupportofthoseenterprisesformonetaryunion,itwas argued,isbasedontheunsustainabilityoffixedexchangeratesunderfullcapitalmobility.Thischapterqualifiesthatargument.First,Ibrieflyreviewsome argumentsmadeintheliteratureabouttheadditionaleffectsofacommoncurrencythatgobeyondthebenefitsfromstablecurrencyrelations.Themainpart ofthischapterwillthendevelopthedifferencebetweenlargeandsmallindustryinthetradablegoodssector.Theanalysisfocusesonthebankingindustry becauseitisstrikinghowdeterminedpartofthisindustrypursuesmonetary union(seeHefeker1996b,fordetails).Onepossibleexplanationforthiscould beitstightlinkstolargeindustry.AsHenning(1994)argues,banksthathave tightinstitutionalizedlinkswithenterprisesarelikelytopursuethoseindustries'aimsaswellfortheobviousreasonsthattheirownwell-beingandprofits arecloselyconnectedtothatoftheindustry.Ifmajorindustryprofitsfrom monetaryunion,forthereasonslaidoutintheprecedingchapter,thanbanks willadoptthesamestrategy.Ontheotherhand,itisremarkablethatmajor banksinEuropeancountriesaremuchmoredeterminedintheirsupportfor EMUthanmajorenterprisesare,atleastifonejudgesfromthepublic statementsmadebythem.Onethusgetstheimpressionthatmajorbanksmight haveanadditionalreasontopushformonetaryunion.Thisadditionalreasonis exploredinthischapter.ThefocusisontheGermanexamplebecauseGerman privatebanksareparticularlyvigorousintheirpursuitofEMU.
