ABSTRACT
The optimistic Werner Report was a victim of the unforeseen events of the 1970s. The oil price quadrupling in 1974 provided the biggest existential challenge to the European economy since the war. Governments had no option but to give the amelioration of the crisis top priority and to downgrade their commitment to Werner. Additionally the British renegotiation of the terms of EEC entry wasted 18 months in which no progress could be made in implementing Werner. And thirdly the Bretton Woods system collapsed rendering obsolete the question of an exchange-rate parity between the dollar and a European currency. The domestic situation in many European democracies also pushed Werner further onto the back burner. No government could ignore the terrorist groups which cost lives and money especially in Italy, West German and the Netherlands. By the end of the decade Werner had been quietly abandoned. However the Franco-German axis of power brought forward the European Monetary System (EMS) at the heart of which was a new role for the Deutschmark as the anchor currency. Thus the Exchange Rate Mechanism (ERM) was created from the wreckage of Werner to signal future intentions to pursue a European Single Currency.
