ABSTRACT
European Monetary Union is, in principle, open to all the European Union's members, and to listen to the politicians, it would appear that most countries are eager to join it. Economists feel, however, that membership of a monetary union requires more than mere political willingness. Mter all, union will imply the pooling of a very important instrument of economic policy making. Hence a presumption that the eventual participants should share some common economic features and 'feel comfortable' with each other. To this effect, the Maastricht Treaty set up a number of prerequisites designed to limit access to countries fulfilling some particular financial and economic criteria.2 These criteria have, however, been heavily criticised by economists. For one thing, they encompass an uneasy mixture of policy instruments (such as the interest rate), intermediate targets (such as the budget deficit and possibly the exchange rate) and ultimate objectives (such as inflation). For another, it has been argued that the fIScal rules 'are badly motivated, poorly designed and apt to lead to unnecessary hardship if pursued mechanically' (Buiter et at. 1993: 87).3 As for the nominal convergence criteria on inflation or interest rates: 'it is wholly unrealistic to impose [them] as conditions for entry when in alllikellhood these conditions can only be fulfilled after the monetary union has been realized' (De Grauwe 1994: 161-2).
