ABSTRACT
The Economic and Monetary Union is the outcome of attempts to replace the post-war monetary system agreed at Bretton Woods with an alternative on European terms. The economic union is based on the four freedoms of movement for goods and services, people and capital; the monetary union is based on a single currency issued by the European Central Bank. The original architecture was characterized by a strict separation of monetary and fiscal policy. The idea was to ensure price stability since governments could no longer count on monetary policy to serve their financing needs. The stability of the world economy that was created at Bretton Woods came to an end by the late 1960s. US administrations urged European leaders to take more responsibility for stimulating growth; these governments in turn asked the United States to pay more attention to their stability concerns. The European Monetary System was set up in 1979 under a Franco-German initiative.
