Economic and monetary union

A group of country forms a economic Union and monetarist when they adopt a single Monnaie and that they open their economic markets to form a Free exchange zone.

The principal economic and monetary union in the world is the economic and monetary Union of the European Union , i.e. the Euro area, which is often simply called economic Union and monetarist .

Definition

An economic and monetary union ( UEM , or in English MOVED for Economic and monetary union ) must fill a certain number of criteria so that it is effective economically.

Monetary union, a stage of economic integration

For Balassa Bleated, the economic and monetary union corresponds to the fifth and ultimate phase of economic integration with the creation of a common currency. It is generally preceded by 4 intermediate stages:

the Free exchange zone which corresponds to a suppression of the customs duties and quantitative limitations of imports between the Member States;
the Customs union which is a free exchange zone equipped with a Common external tariff (tce);
the Common Market, a customs union where the factors of production can circulate without obstacles from one country to another;
the economic Union, a Common Market marked by the harmonization of the Economic policies of the various Member States.

One can notice that although having managed to carry out a monetary union, the European Union sorrow however to harmonize the economic policies of the Member States.

In the historical plan, the economic and monetary union can seem the stage preceding the political union, following in that the example of the Zollverein , customs union of 1834 which, after having followed an evolution similar to that described by Bela Balassa, leads to the German unification in 1870.

The UEM of the European Union

The European Union is a economic Union; all its Member States take part in the Common Market European.

Certain countries reinforced this union by forming a economic union and monetarist , founded by the Traité of Maastricht. This one is consituée Euro area and of its “anteroom”, the Mécanisme of European foreign exchange rate .

History

Is the euro area an optimal monetary area?

See also: optimal monetary Area

The fact that the unit formed by the Member States of the euro area satisfies the criteria justifying the installation of a monetary union is often questioned. In particular, the mobility of the workers between Member States is low, and there does not exist truly of constraint of harmonization of the Economic policies followed by the various countries. The budget of the European administrations, very weak, is not capable to allow important monetary transfers between countries which would make it possible to harmonize the Standards of living.

The relevance of the criteria of Balassa as roasts of analysis of the viability of a monetary area is sometimes questioned.

Some insist on the high degree of commercial integration, others note that the economic differences and the asymmetrical shocks always exist. For example the German Réunification in 1990 required an important strict budgetary policy and monetarist in Germany, rigor which within the framework of the European Monetary System was also binding to the other members of this system, in particular with the France which suffered from it with the economic plan.

Concerning the criteria of Béla Balassa, the euro area fills only part of the theoretical criteria:

Mobilities of the factors: not , in reality, the mobility of the workers is weak (but in increase)

Rate of opening ranging between 30 and 92%: yes

Homogeneity of the preferences: Probably yes (proximity of the cultures)

Diversification of the productions: yes

tax Transfers: not , the policies of stabilization by transfers is rather weak

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