Searching the Gains from a Monetary Union

There are potential gains for most countries joining the planned EMU. It is argued that these gains are not primarily due to the creation of a currency area but, they depend on the high degree of political independence a European central bank can obtain. The transition path to the EMU with its convergence criteria is unnecessarily costly. In Appendix microeconomic benefits of a monetary union are evaluated on both theoretical and empirical grounds. It is argued that a currency union per se does not reduce the costs caused by uncertainty related to exchange rates and other macroecomomic variables. The realization of microeconomic benefits requires that the EMU contributes to macroeconomic stability