Chapter 22 Answer guidance

Q1) Why was the term ‘economic’ and ‘monetary’ union used? What is an ‘asymmetrical EMU’?

See section 22.2

  • Economic union refers to coordination of economic policy, e.g. market regulation, monetary policies, income redistribution policies.
  • Monetary union refers to a common/single market and currency cooperation, either through fixed exchange rate or a single currency.
  • Therefore, economic and monetary union includes both of the above.
  • When European leaders discussed EMU in both 1969 and 1988, this is what was envisaged.
  • However, the two elements have not been developed to the same extent.
  • EMU is ‘asymmetrical’ because monetary union is considerably more developed than economic union.
    • Monetary union: policy has been transferred to a supranational institution (European Central Bank).
    • Economic union: member states retain control over economic policy decisions.
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