Economic and monetary union: of currencies and clubs

Article abstract:

Over the past two decades, the process of economic and monetary union (EMU) in Europe has brought the politics of exchange rates to the forefront of the policy agenda in international relations. This article will examine the significance of exchange rate policy making in Europe by considering the creation and operation of EMU as an example of club formation. There are two major benefits from viewing the process of EMU in this way. The first is that it allows a more fruitful analysis of any potential enlargement in the membership. Second, and leading on from this, it enables conclusions to be drawn regarding the optimal eventual size of the Euro area.