Economic and monetary union and the Euro crisis

Abstract

This chapter introduces Economic and Monetary Union (EMU). It describes the key components of EMU and what happens when countries join the euro area. EMU was the result of decades of collaboration and learning starting in the 1960s. It built on the experience of exchange rate cooperation and subsequently became firmly embedded in the Maastricht Treaty. Once the euro was introduced the member states were soon after confronted with the global financial crisis, the sovereign debt crisis and its aftermath (2009–19), and then with the COVID-19 pandemic (from 2020). These crises brought to the fore various imperfections in the design of EMU and provided opportunities for further development.