Pesmazoglou, Ioannis: Political Implications of a European Monetary System

IOANNIS PESMAZOGLOU

President of the Party of Democratic Socialism

1. A European Monetary System (EMS) is an essential condition for consolidation and progress in European integration οn the assumption that it would provide a) a firm foundation for balanced progress and reduced inequalities in the Community; b) a contribution to the effective reorganization of the international monetary system; c) reinforcement of the political cohesion within The Community. These objectives could be secured only if the EMS is associated with certain organizational characteristics and complementary arrangements going beyond the management of monetary relations between member states and taking into account the conditions and objectives of economic growth and social progress in all member countries.

Fulfillment of the above conditions is essential for the success of the EMS which in turn is a crucial step towards European political union. Monetary policy and therefore the proposal for, and the operation of, a EMS is a highly political matter for the member countries and The Community as a whole. Common policies in other fields, such as agriculture or regional development, depend on a common monetary policy.

2. The interests of member countries in the establishment of the EMS are complementary-not necessarily antagonistic. Germany but also France and perhaps the smaller member countries attach particular importance in the creation of an area of greater stability and economic freedom. For the U.K the scheme could promote arrangements for the sterling balances and lead to a powerful revival of its role as an international lending center. Italy, the U.K and France as well as the peripheral members, such as Ireland and Greece, could legitimately tie their positive attitude in favor of the EMS with adequate mechanisms of orderly adjustments and with stronger policies for regional development and balanced growth in The Community as a whole. A clear positive attitude of principle, inspired by the urgent necessity of strengthening the Community should be linked with specific proposals regarding the organization and operation of the scheme.

3: The EMS should be founded on three basic principles:

a) It should be conceived, organized and managed on a Community approach as distinct from ideas inspired by, or leading to, “two or multiple tier” arrangements, as proposed in the past. There is a strong overall “community” interest, as well as an interest of the stronger countries, in shaping monetary decisions in consultation with other member countries and with due regard to the latter’s specific problems. An essential feature of the new EMS plan should be to create and promote an increasingly close affinity of interests between members of the enlarged Community.

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