A reinterpretation of EMU history: imbalances, financial risks and corporate power

Abstract This article offers a new interpretation of Economic and Monetary Union (EMU) history that weaves together three distinct insights. First, EMU development is driven by the policy challenges thrown up by the different types of financial risk generated by the deep-seated structure of macroeconomic imbalances entailed in a single European market. Second, the introduction of a single currency profoundly transformed that financial risk, turning it from currency to sovereign credit risk. Finally, the third is the notion of corporate power, which implies that the corporate community has been the key constituency advocating for supranational–federal solutions to the policy challenges and that its power gradually tilts the balance towards such solutions. The article then divides the history of EMU into four distinct stages and shows how the corporate sector advocated for institutional solutions at odds with the preferences of powerful member states on the surplus side of the imbalances and how it ended up carrying the day.