Only a few countries are likely to be in an economic and monetary
union (EMU) if it happens in 1999: Germany, France, Luxembourg, Austria,
the Netherlands and Ireland are the most likely members. The rest will
either fail to qualify for EMU or, as the UK and Denmark may do, they
will meet the Maastricht Treaty’s criteria for membership but choose
to stay out.
The relationship between the Ins and Outs (or pre-Ins as current
Brussels jargon calls them) is of obvious importance to the operation of
the monetary union and to the conduct of economic policy in Europe. Yet
the Maastricht Treaty says little or nothing about how this relationship
should be designed.
Even now, vital questions remain unresolved. How, for example, is
macroeconomic policy between the Ins and Outs to be coordinated? How
does the institutional set-up of the monetary union influence the
relationship between the Ins and Outs? And what can the economies of
Southern, Central and Eastern Europe - who aspire to join the EU and, in
principle, its monetary union - learn from the experiences of the
initial Outs?
The informal meeting of EU finance ministers (ECOFIN) in Verona over
the weekend starting on 12 April 1996 set out principles to govern an
‘EMS 2’, but they are still preliminary and highly controversial.
CEPR is the market leader in research on the EMS and EMU and a number
of CEPR researchers have recently been addressing the issues surrounding
the Ins and Outs of EMU. Some of the results of their research are
presented in this special issue of European Economic Perspectives.
Papers were first presented at a workshop in Rome in February hosted
by the Banca Nazionale del Lavoro. They have subsequently been revised
in the light of the decisions at the Verona meeting and are here
summarized in a user-friendly form for policy-makers in the private and
public sectors.
CEPR is grateful to the Banca Nazionale del Lavoro for their
sponsorship of this special publication.
Richard Portes