ABSTRACT
This chapter focuses on the economic and financial policy objectives and transformations underpinning Greece's course towards economic integration and the monetary union. It argues that Greece's economic Europeanization followed an orthodox path of subjecting the economy to external constraint mechanisms that enabled governments to ease sociopolitical resistances and to conform to the dictates of economic policy pragmatism. Economic adjustment in the 1985-87 period was spearheaded by a serious macroeconomic crisis. The way for financial liberalization had been paved through the gradual rationalization and upward unification of interest rates after 1984. However, the rationale for financial reform was perhaps predominantly of a macroeconomic rather than a microeconomic type. Financial liberalization in the second half of the 1980s was necessitated by the urgent need for macroeconomic stabilization. Governments have used macroeconomic policies to trigger the disciplining mechanisms that would facilitate structural adjustment by eroding domestic sociopolitical resistance.
