February 2011 THE FRANCO- GERMAN TANDEM CONFRONTS THE EURO CRISIS www.fondapol.org Wolfgang GLOMB www.fondapol.org THE FRANCO-GERMAN TANDEM CONFRONTS THE EURO CRISIS Wolfgang GLOMB The Fondation pour l’innovation politique is a free-market, progressive and European think tank. President: Nicolas Bazire Vice-president: Charles Beigbeder Chief Executive Officer: Dominique Reynié
[email protected] ABSTRACT The history of European integration is also that of monetary integra- tion. Franco-Germany co-operation has always played a decisive role in European monetary policy. It is in this area that disagreements persist between the two countries, as well as a desire to arrive at a compromise without which the euro would not exist. The monetary issue only became significant in Europe with the growing integration into the Common Market and the collapse of the International Monetary System. A closer co-operation within the European Currency Snake failed because of the lack of synchronised economic policies. Later, the European Monetary System (EMS) was launched in a turbulent envi- ronment but stabilised after the “move to a policy of austerity” decided by François Mitterrand. This trend led to the first debates in France on how to create a common European currency, echoed by similar ideas on the German side. However, many Franco-German divergences persisted and the Treaty of Maastricht corresponded more to the German concept of stability. Such ideas were not fully implemented during the first ten years of the euro’s existence. In the spring of 2010, the economic differences between the Member States caused turbulence in the financial markets and to the threat of default on the part of Greece.