Following the Franco-German harbinger? The footprint of the euro in regional monetary integration

Abstract:

This article analyses the ideational footprint of the euro in regional monetary integration. Upon the basis of over 70 financial elite interviews in China, Brazil and the Gulf Cooperation Council (GCC) countries we find empirical evidence to suggest that EMU triggered considerable symbolic effects in stimulating regional monetary cooperation up to the recent Eurozone crisis.

Nonetheless, our analysis coincides with Cohen’s in being sceptical about the possibility of monetary unions in Latin America, the GCC and East Asia. This is partly explained by a lack of sense of community in these regions. However, where we revise Cohen’s work is in the notion that monetary unions require a regional leader.

EMU stands out because it is primarily based on the Franco-German partnership (which remains crucial for its survival) and not on Germany’s leadership. This joint leadership is absent in our three case study regions and thus might explain why progress towards monetary union has been limited.