AEI - The European Community looks at monetary integration

 Speech by Vice-President Ortoli at the Financial Times Colloquium. Frankfurt, 14 February 1979

"...The developments which have taken place since then and which resulted in the decisions taken at the Hague Summit on Economic and Mometary, the Werner Plan, the Barre Plan, the partial establishment of the "snake" and then the initiatives launched in 1977-78 were prompted by two major considerations.

The first consideration is a political one and reflects the conviction that our countries have a common destiny. The idea ot European Union, with'all its imprecision, is the expression ot this aspiration, and Economic and Monetary Union the key instrument.

The second consideration is much more practical and of much more immediate significance. It stems from two premices: that monetary instability constitutes a major threat to our economies, and that to put an end to such instability, we must begin by establishing in Eurppe, between highly interdependent and institutionally linked economies, a zone of monetary stability..."
...

The first objective is to maintain real stability in the relationships between the currencies participating in the system

.. {a) In order to do this, any two Community currencies will each have a maximum permissible fluctuation margin of 2.25% against one other, with the exception of the lira, for which the margin will be 6%. Once the limit is reached, intervention will be automatic, but here we see the first difference with the "snake". This lies in the scale and time-span of the resources deployed to help ensure that the maximum divergence limit is not exceeded and also in their form since the EMCF will henceforth issue ECU against the deposit by the central banks of 2o% of their gold and dollar reoervcs.

...

The emergence in Europe of a zone of monetary stability is in no way an indication tlmt the Community wiches to take a stand against the United States but it docs mean that, in order to defend this stability, Europe must enter into a constructive dialogue with its major partners on the future ot the international monetary system.


Source: http://aei.pitt.edu/11369/