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Volume 54, March/April 2019, Number 2 · pp. 96-100

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Challenges of the Euro

Harold James

The evolution of institutions – even exemplary ones – is never completely smooth. The Federal Reserve System, which is often seen as a model for central banking, looked as if it was deeply flawed on its twentieth anniversary in the aftermath of the Great Depression in 1933. It required further development. Europe’s move to monetary integration with a common currency (the euro) is quite a unique process. It is also held up as a model for monetary cooperation in other parts of the world: in the Gulf region, where there are periodic discussions of monetary unification, as well as in Asia and Latin America, where movements towards greater monetary integration also have some support but encounter a plethora of difficulties. Nevertheless, no later than the onset of the global financial crisis (2007-08), it became clear that there were substantial design flaws in the concept of the Economic and Monetary Union (EMU).

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