Friday, August 24, 2012

TPS - "Tommaso Padoa-Schioppa and the origins of the euro" by Ivo Maes

Ivo Maes
March 2012
National Bank of Belgium

"Tommaso Padoa-Schioppa was one of the great architects of the euro. He is remembered in particular as co-rapporteur for the Delors Committee and as a founding member of the European Central Bank's Executive Board. He studied economics at the Bocconi University in Milan and at the Massachusets Institute of Technology (with Modigliani). He started his professional career at the Research Department in the Bank of Italy. For Tommaso Padoa-Schioppa, becoming Director-General of the European Commission's DG II (from 1979 to 1983), was a defining moment in both his career and life. At the Commission, his main priority was the European Monetary System, which was launched in March 1979. The early years of the EMS were difficult, with tensions on the exchange markets, several currency realignments and the shelving of plans for a second institutional phase. Padoa-Schioppa was very closely involved in several projects to strengthen the EMS and to improve economic policy convergence. Moreover, he tried to strengthen the position of the ECU and to relaunch European financial integration. The most forceful exposé of his ideas was probably the inconsistent quartet, stating that the combination of free trade, free capital movement, independent monetary policies and fixed exchange rates was not sustainable.
The other main objective for Padoa-Schioppa, as Director-General of DG II, was the strengthening of its analytical capacity. Coming from the Bank of Italy, and with strong contacts with the Anglo-Saxon academic world, Padoa-Schioppa sought to develop DG II's model-building capacity and its links with the academic world. As such, he played a crucial role in the professionalisation of economics at the European Commission. As Padoa-Schioppa emphasised, professionalism and "telling the truth" are probably the best ways that international institutions can contribute to strong and sustainable economic policies and performances. The professionalisation of DGII, together with the strengthening of the Monetary Directorate, were furthermore essential elements to prepare DG II for the important role it would play in the EMU process, also intellectually (for instance with the study "One Market, One Money", CEC, 1990). As such this is also a beautiful illustration of Padoa-Schioppa's emphasis on the importance of strong institutions, also in the process of European integration.
At the Commission, Padoa-Schioppa became further immersed in several European networks. Of crucial importance here were his contacts with Jacques Delors. This would be of enormous importance for his further career, becoming one of the architects of the single currency. However, he was also among the first to warn of the dangers of "a currency without a State"."


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