Private tools for political goal: European Currency Unit, Private Networks and the Making of Economic and Monetary Union
Alexis Drach (Université Paris 8) & Aleksandra Komornicka (University of Amsterdam)
In 1991, the European Currency Unit (ECU) was the world's fifth-largest traded currency. Created as part of the European Monetary System (EMS) in 1979 and placed at the centre of it, ECU served as a basked currency to measure divergence between European Economic Community's (EEC) member states currencies and for the settlement operations of European institutions and central banks. However, alongside this official ECU market, soon a private one developed. It was devised largely by commercial banks, who mirrored the public ECU and used it as a financial innovation whose main advantage was to hedge clients against the volatility of exchange rates and interest rates. The private ECU brought the ECU general concept closer to a currency, without a state and a central bank.
This paper investigates this forgotten ECU private market, which was as much a financial innovation as a tool for advancing the Economic and Monetary Union (EMU) project. It shows that the political project behind ECU was a key to its private market success. The argument unfolds over three sections. First, the paper looks at the 'ECU network', namely the group of Commissioners, bankers, businessmen and academics who promoted the idea of the European currency in the 1970s and became instrumental in popularising private ECU in the 1980s. Second, the paper scrutinises the rise of ECU in the financial sector. As it shows, although offering products in ECU did not necessarily go hand in hand with support for European integration, being primarily a source of profit and a product to sell to customers, the leaders of the ECU private market often had political motivations. Third, the paper zooms in on the non-financial sector, for which ECU was inextricably linked with EMU. In contrast to banks, ECU offered little benefit for non-financial companies and thus was used mostly by actors involved in the 'ECU network'.
The study contributes to different fields of historiography including the history of money, the history of European integration and business history. On top of the sources from the Historical Archives of the European Union, the paper relies on the archival collections of banks (Barclays, Lloyds, Crédit Lyonnais, Société Générale and San Paolo di Torino), non-financial businesses (Fiat, Olivetti, Saint Gobain) and European business associations (the European League of Economic Cooperation, the Association for the Monetary Union of Europe).
Fiscal union and the single currency: the development of the EEC’s borrowing capacity, from Rome to Maastricht (1957-1992)
Emmanuel Mourlon-Druol (EUI)
The 2020 NextGenerationEU recovery plan has brought back under the spotlight the question of the EU’s capacity to borrow. But the EEC’s capacity to borrow has in fact a long history, which this paper explores in the context of the making of Economic and Monetary Union (EMU). Leaving aside the development of a greater centralised budget, borrowing was indeed another major topic of discussion in order to develop the European Economic Community (EEC)'s fiscal capacity in a monetary union framework.
This paper argues that discussion about the EEC’s borrowing capacity was closely linked to the making of EMU, from the very beginning of EMU discussions in the late 1960s/early 1970s, but that the connection faded away just as EMU materialised in the early 1990s. The paper first looks at the earliest discussions on borrowing in 1969; then moves on to analyse the revival of such discussions at the time of the oil crisis and then of the creation of the European Monetary System (EMS); and finally examines the progressive disinterest of European policymakers towards EEC borrowing operations in the 1980s in spite of the demand for lending operations. Taken together, the three parts highlight the financial and political challenges associated with the development of the EEC’s borrowing capacity.
Photo credit: © Communautés Européennes 1989