ABSTRACT
In the second half of 1970 and in 1971, while the US monetary authorities reflated the economy, the European central banks were trying to keep domestic interest rates high in order to combat inflation. This served as another illustration of the fact that European Economic Community (EEC) countries could no longer use monetary policy for internal stabilisation purposes as long as it ran counter to the policy followed by the US monetary authorities. Faced with a serious monetary crisis which originated abroad and a US policy which presented them with faits accomplis, the EEC countries failed, with the exception of minor and short-lived instances, to adopt a joint stand. France secured a narrowing of intra-EEC margins of fluctuation and obtained a commitment from Germany that instruments of capital control would be introduced in the face of a new monetary crisis. Fixed exchange rates were not the only monetary issue with which the EEC countries were faced before the Paris Summit.
