ALTHOUGH STILL LESS than one year old as this volume goes to press, European
Economic and Monetary Union (EMU) is already under trial, charged
with at least three offenses. The first is false advertising: Europeans, it is
claimed, did not get the strong, stable currency they were promised, for
within seven months of its birth the euro had lost 13.5 percent of its value
against the dollar. The second is obfuscation: markets are finding the signals
from the new monetary institutions confusing and inconsistent, and a
scarcity of relevant information—from delays in releasing reliable euro
area–wide statistics to lack of access to the deliberations of the Governing
Council—makes it difficult to forecast economic developments and to
understand the policy conduct of the new European Central Bank (ECB).
The third is lack of impartiality: the ECB’s new policies are claimed to be
exacerbating asymmetries between fast-growing and slow-growing countries
and validating the presumption that the costs and benefits of monetary
cohabitation are unfairly distributed among small and large member states.