EU446      Half Unit
The Political Economy of European Monetary Integration

This information is for the 2025/26 session.

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We study the process of European monetary integration. We consider the political and economic rationale for the establishment of a monetary union. This leads us to study the theory of optimal currency areas and its relevance today. This is a theory analysing the costs and benefits for individual nations of joining a monetary union. We introduce the notion of incomplete monetary union and we analyse the implications of the incompleteness of the Eurozone for its stability and sustainability. A central question in this course is how the Eurozone can be completed so as to make it less fragile to the occurrence of crises. We study the role of the European Central Bank as a lender of last resort in the government bond markets. We explore the possibilities of moving into a fiscal union as a way to reduce the Eurozone’s fragility. Additional questions addressed in this course include: How much inter-state risk sharing has there been during crises and through which channels? What is the role of the Eurozone payment system (Target2)  in this process? Has the eruption of the Covid-19 crisis affected the stability and the sustainability of the Eurozone? How successful has the ECB been in fighting inflation? Will the euro take over the dollar as the global currency?

15 hours of seminars and 10 hours of lectures in the Winter Term.
1.5 hours of seminars in the Spring Term.

This course has a reading week in Week 6 of Winter Term.

A review session will be held at the start of the Spring Term to prepare for the online assessment.

Essay (2000 words)

Essay (3000 words)

One 2,000-word essay and one group essay of up to 3,000 words.

• Paul De Grauwe (2022) The Economics of Monetary Union (Oxford University Press, 14th ed.), (15th edition to be published in 2026);
• Kenneth Dyson and Kevin Featherstone (1999) The Road to Maastricht, OUP;
• Waltraud Schelkle (2017) The Political Economy of Monetary Solidarity, Understanding the Euro Experiment, Oxford University Press;
• Ashoka Mody (2018), Euro Tragedy. A Drama in Nine Acts, Oxford University Press
• Adam Tooze, (2018). Crashed: how a decade of financial crises changed the world, New York: Viking.

Written test (100%)

The written test for this course will be administered via Moodle. Questions will be made available at a set date/time and students will be given a set period in the ST to complete the answers to questions and upload their responses back into Moodle.