With the advent of the EU’s internal market in the 1990s, however, the issue of a common currency was revived. National currencies came to be seen as the last major barrier to the internal market’s full impact, which would pave the way to even greater European integration. To a large extent, the driving force behind the Werner Plan and the Maastricht Treaty was political. Experience has taught us that institutionalised economic cooperation can be an antidote not just to trade conflicts but even to war. A common currency is a strong political symbol that can render cooperation durable in the daily economic round. Instead of being just a topic for solemn speeches on television, European cooperation with a single currency could be something real that people carry around in their purses and pockets. 1  BIS Review 102/2000  But the Maastricht Treaty was, of course, also backed up by the strong economic forces that lay behind previous attempts at monetary union. By reducing exchange risks for firms, a single currency facilitates cross-border trade and investment. It also helps to integrate capital markets, rendering them larger and deeper, which aids the supply of corporate capital in Europe. These considerable effects are accompanied by others that we ought not to underrate. In the present situation, moreover, they are likely to be enhanced by the internet and other new information technology. Not the least of these is that the monetary union eliminates the psychological barrier that different currencies raise when we try to compare prices in different countries.
But an intense dialogue has now started on structural issues at extraordinary Council meetings, such the coming meeting in Stockholm, as well as in more regular processes such as the Luxembourg process for better employment policies and the Cardiff process for more efficient product markets. The EMU to date It must then be asked, of course, how well this framework is working now that EMU is a reality. It is certainly too early to draw definite conclusions about these matters but I can offer some observations. The first point worth noting is that we are now reaping the benefits of the convergence process and of the consensus on stabilisation policy that has, in fact, been established. Europe is now experiencing an  3  BIS Review 102/2000  economic upswing in which macroeconomic conditions are more stable and inflation expectations lower than for many decades. Since the move to EMU, there have been no clear signs of asymmetric shocks that might hit a particular country or group of countries, although the Asian crisis and the subsequent unrest did affect the member states somewhat differently. And we do not know what would have happened during the tempestuous autumn of 1998 if Stage Three had not been well on the way. Perhaps exchange rate developments in Europe would have been considerably more dramatic and disruptive. It will be recalled that the Swedish currency’s deviation from a reasonable long-term level was considerably greater than that of, for example, the Finnish markka.