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Comments on Chapter 3 – The future of EMU
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Bordo and Jonung have written a fascinating paper, which combines topicality with an impressive historical sweep. They differentiate national from multi-national monetary unions, and emphasize the interconnections between national monetary integration and political union. Arguably their most important conclusion is that, ‘Political unity is the glue that holds a monetary union together. Once that dissolves, it is most likely that the monetary union will dissolve.’ They go on to observe that European economic and monetary union is ‘unique’, because they could not find any precedent for politically independent nations surrendering ‘their national currencies to form a common monetary union based on a new unit of account under the leadership of a common monetary authority’.