"European monetary union as a response to globalization"

The argument in this chapter is that formation of EMU is about restructuring the financial architecture of Europe in order to enhance-rather than simply diminish-national autonomy. By implication, EMU functions-at least in part-to shore up and insulate Europe's member states during a period of necessary adjustment. The need for adjustment derives from the growing requirement for flexibility in the allocation of economic and political resources. Such flexibility is necessary for market actors and state agents to meet a range of objectives in the provision of goods and services, private and public ... [t]his argument is developed in five sections. The first section makes the broad claim that Europe's economic and monetary union effectively reconstitutes the compromise of embedded liberalism at the regional (European) level. The second focuses on the relationship between capital market integration and the development of greater flexibility in the current account. The third places current account flexibility against the background of broader strategies for macro-economic management. The fourth draws attention to the associated problems of volatility and risk when capital markets are integrated but currencies are not. The fifth section concludes by returning to the problem of reforming the welfare state.