Zdeněk Tůma: Europe's club of nations needs a rule change Comment by Mr Zdeněk Tůma, Governor of the Czech National Bank, in the published Financial Times (London, England), 4 January 2007. *  *  *  The European Union is a pretty big club and it will only get bigger. The rules and institutional framework used by the 27 members to make decisions are, however, much the same as they were when there were six or 15 members. The process of enlargement poses a dilemma: with the number of members growing we need rules respected by everyone more than ever before, but at the same time such rules can be a straitjacket, especially given that the present rules were designed for a very different club. One example is monetary policy and the process of adopting the euro. Policymakers designed a set of rules 15 years ago that are applied any time a country wants to join the single currency. The country is required to comply with the Maastricht criteria and also to stay for at least two years within the exchange rate mechanism-2 framework. Back then, these rules might have been perfectly legitimate, but today they are outdated and -counter-productive. The ERM-2 might have made sense in a situation where monetary policies around western Europe were based primarily on fixed exchange rates explicitly or implicitly pegged to the D-mark. Then, the ERM-2 framework worked as a platform for co-operation among countries with interlocked currencies.
BIS Review 3/2007  1  We are caught between two poles. We need rules for policymaking, yet we must also retain some discretion. The response to the economic arguments should certainly not be: "The legal department has decided that the treaty says . . . ". 2  BIS Review 3/2007