ABSTRACT
In European Monetary Union (EMU), France, Italy and other European Union countries would be the equal of Germany, instead of being forced to follow the German diktat as had become the practice since the early 1980s. With EMU, Germany lost its monetary power and a valuable brand name: the Deutschmark. Presumably, the Chancellor must have thought that the cost for Germany of losing its monetary power was more than compensated not only by EMU's economic benefits, but also and more importantly by non-economic gains. EMU is certainly going to increase dramatically the degree of capital mobility within the euro area. Although EMU may unleash centrifugal forces, very little has been done to create institutions that will make risk sharing possible at the level of Euroland. The introduction of EMU is a major undertaking, full of potential for a renewal of economic dynamism in Europe. At the same time, like all projects full of promise, it is a risky venture.
