Mission

In recent years two developments have proceeded together, and reinforced each other.

• The first is a tendency towards concentration and aggregation of financial markets, particularly in Europe.
• The second is a tendency towards the reduction of international currencies or, at least, of the ability to pursue independent monetary policy.

The first development is linked less to the widespread liberalisation of capital movements, than to the diffusion of physical location of markets, that is made possible by the revolution in information technology.

The second development, while most dramatic in the case of the substitution of national currencies with a new common currency in a subset of the members of the EU, is also widely prospected as a preferable arrangement for emerging economies. These, particularly in Latin America and in transition economies, could more easily acquire from a foreign monetary authority a credibility that their own monetary authorities do not yet possess.

The two phenomena interact with each other. In fact, they raise the question of whether the world financial and monetary system may evolve towards a unique capital market, physically de-located but managed by some major financial centre. Also, they raise the question whether the world is not ready to go back to fixed exchange rates, possibly among a very reduced number of currencies, or even a unique world currency.

The aim of the project is then threefold:

• to assess the functioning of EMU, both on the theoretical and the empirical level;
• to contribute to the understanding of the process and the liabilities of the financial integration process under way in Europe;
• to analyse the consolidation process of currencies at the world level.

More than 100 participants have taken part in this continuing project. All are encouraged to participate in the continuing discussion on the EEI Group's worked ideas (See EEI Memo Board). We would like to collect as many papers as possible (via Publications on menu), and create a useful Bibliography (See Bibliography via Menu).