European Monetary Unification and International Monetary Cooperation

In this paper we describe some of the opportunities and perils for international monetary cooperation associated with EMU. Our approach brings together two strands in the literature; one concerned with institutions, the other focusing on policy consensus. Our analysis raises questions about the scope for monetary cooperation in Europe and across the Atlantic. While institutional and intellectual support for monetary-policy coordination within Europe will be further strengthened in Stage III of the transition to EMU, a limitation of that framework concerns relations between the "ins" and the "outs" -- between member states that will and that will not be founding members of the monetary union. While this problem can be remedied, it presently looms as the principal threat to monetary cohesion in Europe and to the broader program of economic and political integration with which the EMU project is linked. By comparison, institutional and intellectual support for transatlantic monetary cooperation, and for G-7 monetary cooperation more generally, remains deficient. The advent of Stage III will only highlight these limitations.