An essay on the political and institutional deficits of the Euro. The unanticipated fallout of the European Monetary Union

The Euro is an unprecedented innovation, which can only very partially be analysed with the theory of optimal monetary zones, nor most conventional approaches. It calls for an analysis integrating three domains and levels:the change in the rules of the game at theeuropean level, the impact upon the national institutional architecture and "régulation" modes and the transformations of domestic political arena. It is argued that various interpretations can be given to the Amsterdam Treaty and its implementations, the more so since the new institutional architecture is far from coherent, but quite on the contrary, political conflict and economic unbalance prone. The survey of the literature then deliver a method for generating a whole spectrum of scenario by combining three major hypotheses: the ex-post objectives pursued by the European Central Bank, the existence and extension of budgetary and political innovation in reaction to the Euro and finally the unequal ability of different societies to be reformed in line with the constraints and opportunities generated by the EMU. The very political and institutional deficits of the Amsterdam Treaty gives a low probability to totally rozy as well as to quite gloomy scenarios, but opens a quite uncertain process of trials and errors with possibly radical innovations which would complement the Euro. This essay concludes by suggesting some agenda for future negotiations about the European institutions.