SUERF Colloquia and Colloquia Publications 1969-2003 in Figures and Locations
Colloquium 3: Aspects of European Monetary Union
Strasbourg, January 1972
President of SUERF and Chairman of the Coloquium: Hans W.J. Bosman.
No Colloquium Book
9 papers in 8 issues of the SUERF SERIES nº 3 through 10.
Authors:Paul Bareau, F. Boyer de la Giroday, Louis Camu, F. Cassell, August Leeman, Francesco Masera, John E. Nash, Fabrizio Onido, Herbert Weise.
Publisher: SUERF, 1972(30 + 23 + 12 + 19 + 11 + 35 + 43 + 27 pp.) – On the breakdown of the Bretton Woods system:
“Le principal évènement qui a marqué cette année est sans doute celui dont nos avons pris connaissance le 16 Aỏt dernier (i.e. The Nixon Declaration of the inconvertibility of the dollar, 15 08 1971). Ce jour là, nous avons appris qu’une structure monétaire du monde avait vécu et s’il faut regarder cet événement, qu’il me soit permis de citer Sartre, ‘avec des yeux réinventés’.
Depuis des années, les systèmes monétaires occidentaux ont vécu dans le climat entretenu par une source de création de liquidités qui était le déficit persistant de la balance des paiements des Etats-Unis et sa multiplication par la création d’eurodollars...
Cette source de création de liquidités ... et son financement pratiquement illimité par le reste du monde ont pris fin ...” (Louis Camu, President of the Banque de Bruxelles, in the opening address, SUERF Series nº 3, p. 2) – On the impact on European Monetary Cooperation, particularly on the
Werner Plan:
“The breakdown in monetary cohesion between EEC countries reflected substantial divergencies of their cost and price structures; but the basic causes went still deeper and are to be found not only in the lack of structural or institutional machinery for achieving the required cohesion, but in doubts as to whether, even if this machinery existed, the national governments would have the will and ability to carry through the necessary adjustments in their domestic monetary, fiscal and other relevant policies.” (Paul Bareau, Economic Adviser
to the International Publishing Corporation Limited, London, author of the final report of the Colloquium, SUERF Series nº 3, p. 17)
“...Any choice of an “optimum” solution makes no sense unless at the same time we understand what the “optimum” path is which leads to that solution.
Or else we fall into the temptation, which has long beset economists, of amusing ourselves with more or less refined descriptions of a world which we still do not know how to get into. This is, in my opinion the major logical flaw in the Werner philosophy and more generally in the attempt to derive, straight from the theory of interregional payments a set of consistent criteria for unifying the present national currency areas into larger currency domains.”
(Fabrizio Onida, Professor of international Economics at the University of Milano, in a discussion of the theory and policy of optimum currency areas and their implications for the European Monetary Union, SUERF Series nº 9, p. 25)
– Economists versus‘monetarists’ in shaping EMU:
“One of the basic issues before the colloquium was the clash between those who hold that monetary union can only be achieved and maintained when economic and virtually complete political union have already been secured and those who regard monetary union as one of the means and as providing part of the discipline required to achieve complete economic union. Is monetary union one of the foundation stones of economic union, or is it the final coping stone of the arch?” (Paul Bareau, cf. supra, p. 17)
“The only serious argument in favor of a European currency area preceding a complete economic and political unification is perhaps the pressing need for a new international asset and official intervention currency alternative to the dollar.” (F. Onida, cf. supra, p. 29)
– Fixed or adjustable exchange rates within EMU:
“The crucial question thus becomes: to what extent are the major advantages which a EMU is expected to bring about (a faster process of economic integration through institutional and policy harmonization; a more efficient mechanism of financing and adjustment of externally disequilibria, which implies a more equitable distribution of the burden of adjustment as among deficit and surplus regions; a decisive step towards a more international monetary system) more likely to follow from a mix of policy cooperation plus parity adjustments rather than from Werner’s prescription of policy cooperation plus irreversible parity pegging? ...” (F. Onida, cf. supra, p. 31-32)
“There is a prima facie evidence that, for European countries characterised by a smaller economic size and/or a greater weight of regional and structural imbalances relative to their partner countries, joining a common currency area under present conditions is likely to sharpen rather than help to solve the problem of the current asymmetries in the burden of adjustment ... Even aside from national interests the formation of a European currency area starting from unalterably fixed parities does not seem to be a necessary nor a sufficient condition for improving the efficiency of our present international monetary system through a forced reduction of the dollar monopoly position.
(ibid, p. 31)
“...I am led to conclude that in the present situation a plan for intra-EEC adjustable parities coupled with a common set of controls upon intra and extra-community transfers, bank deposits is the most reasonable alternative.”
(ibid, p. 34)
– Diverging views on a common European currency:
“The views expressed on the need for a common European currency ranged from the support for full and even immediate union ... to complete rejection of the need for such project.” (P. Bareau, op. cit., p. 20)
“Si les pays européens entendent préserver leurs chances d’union – dans l’indépendance – ils doivent tenter de se dégager de l’emprise du dollar.
A défaut d’une action qu’il faudrait immédiatement mettre en oeuvre sous peine d’en voir disparaỵtre la possibilité même, le choix qui leur est offert aujourd’hui se situe entre les deux termes de l’alternative suivante: la prolongation des perturbations actuelles qui risquerait de faire disparaỵtre la Communauté elle-même, ou la consécration de l’étalon dollar universel.
Dans la mesure ó l’on considère ces évolutions comme également indésirables, on peut se demander, et l’on s’est demandé de divers cơtés, s’il ne serait pas possible de faire naỵtre d’une action commune, un instrument monétaire commun, qui tendrait à remplacer le dollar dans autant de fonctions possibles au fur et à mesure des progrès de la construction économique et monétaire.” (F. Boyer de la Giroday, Director of Monetary Affairs at the European Commission, SUERF Series nº 10, p. 18-19)
“If the common currency is to have an operational meaning, rather than being a symbol, and to work without creating tension and a clash of interest among member countries, it cannot be apriusbut only aposteriusof economic and
political integration of the Community countries.” (Francesco Masera, Economic Adviser of the Banca d’Italia, SUERF Series nº 6, p. 5)
– The role of sterling after Britain’s entry into the EEC:
A British view: “The marriage” that has now been arranged is not one between a debt-ridden Britain and a reserve-rich Community – a match of our liabilities and their assets. The bride, in fact, brings a fine dowry. London might become in effect a giant financial intermediary, taking in short term funds from other parts of the Community and transmuting them into longer-term loans and direct investments. The question is whether the main vehicle currency for those transactions would be sterling or (Euro-) dollars or a ‘common’ EEC currency.
I do not foresee Britain’s membership of the Community having a dramatic effect on the international role of sterling ... The forces reshaping sterling’s role are in the main global ones, and they seem unlikely to be fundamentally changed by Britain’s accession to the Community ... My guess ... is that the dollar will continue to serve as the dominant currency in international finance and hence I would not expect sterling to enjoy (or suffer) a grand resurgence within an enlarged EEC.” (Francis Cassell, Senior Economic Adviser, The Treasury, London, SUERF Series nº 5, pp. 5, 10, 11)
A Continental view: “It appears quite natural that substantial scruples are arising with regard to the integrative capacity of a currency that brings such a world-wide network of connections and financial ties as dowry for entry into the European ‘matrimony’... It is necessary in the interest of the European partner countries, as well as in the self-interest of Britain, to fundamentally adapt and streamline the role of sterling and to relieve it of the burdens and risks which no longer stand in a commensurate relation with the present international economic capacity of the country. This applies especially to the reserve currency function with all its implications ... Once the ‘historical ballast’ is discharged and the British economy gains a new platform through the monetary and economic cooperation with the European partner countries, a certain regeneration of the international scope and efficiency of sterling is quite within the reach of future development.” (Herbert Weise, Institut für Weltwirtschaft, Kiel, SUERF Series nº 8, pp. 19, 29)
– On the future of Financial Centres in a European Monetary Union:
A Continental view: “La notion de ‘centre financier’ est en train de perdre une grande partie de sa signification géographique bien définie. Le développement des techniques et moyens de communication a contribué dans une mesure considérable à l’estompement de cette conception...L’union monétaire placera le développement des centres financiers sous un jour tout
autre que ce n’était généralement le cas jusqu’à présent. En effet, lorsqu’on soupèse les chances de développement, l’on parle souvent des entraves nationales qui se situent essentiellement sur le plan monétaire. Leur suppression favorisera ... les fusions et d’autres formes de coopération qui, jointes au développement des moyens de communication, réduiront l’importance locale de Paris, d’Amsterdam Bruxelles, etc par rapport à un marché non régional qui s’appuiera plutơt sur le développement institutionnel que sur les avantages locaux...” (Auguste Leeman, Professor at the Catholic University of Leuven and Executive Director of Kredietbank, Brussels, SUERF Series nº 7, p. 6, 11)
A British view: “At least part of the reason for different modes of development (of financial centres) is the difference between financial centres which have traditionally been national and ‘inward’ looking and financial centres which have been international and ‘outward’ looking ... Liberalization of international payments combined with the growth of the Eurodollar market gave an enormous stimulus to the only financial centre capable of taking advantage of these developments, namely the City of London ... Many practitioners in the City have long felt that the internationalism and ‘outward’
looking orientation of the financial centre in London could actually find itself reduced or hamstrung by European legislation on many international transactions (e.g. international insurance) and by the possible dangers of a powerful central bureaucracy with little experience of or sympathy for international markets ... All (this) refers to preoccupations which have, in a very real sense, been overtaken by events ... Today and in the future, whatever happens to the larger international issues, the main difference between the members of the EEC (including the U.K.) are differences of institutional and legal structure. Progress in such matters as a European company law, uniform European savings and investment institutions and patterns, uniform investment requirements and policies of insurance companies and pension funds, uniform reporting and accounting practices of public companies etc. etc. are likely to be far more important in determining the final shape of financial markets and methods of intermediation than any spectacular currency or monetary initiatives.
The fact that these institutional and legal factors are deeply rooted in diverse historical, sociological and political backgrounds is a measure of the problems of future integration, and of reasonable forecasting of the future.”
(John E. Nash, Executive Director, Samuel Montagu and Co, Ltd, London, SUERF Series nº 4, pp. 4, 15, 17, 23)
Colloquium 4: Multinational Enterprises – Financial and