German Politics and EMU Convergence

Abstract

The Maastricht Treaty delineates several "convergence criteria" that govern the entry of all member states of the European Union (EU) into European economic and monetary union (EMU). Because macroeconomic adjustment within monetary union significantly reduces the severity of austerity measures necessary to attain convergence, this paper argues that a rapid transition to monetary union is far more desirable than the gradual convergence process outlined in the Maastricht Treaty. Since monetary union is a political as well as an economic process, this paper analyzes the political dynamics within Germany and the entire EU that have led to the acceptance of the gradual approach to monetary union and the convergence criteria. The paper concludes with an explanation of how the emergence of several salient political crises, combined with certain political conditions, will result in the beginning of the rapid transition to monetary union in the EMU and the abolition of the convergence criteria.