As the European Union prepares to welcome up to twelve new members, debate is heating up among the leading candidate countries about whether or not speedy adoption of the euro will promote or impede rapid catch-up growth. But expanding the reach of monetary union raises two equally fundamental questions for current euro members: does formal political independence for the European Central Bank deliver truly independent judgements about policy? If not, will expansion aggravate the problem because the biases of ECB members will become even more divergent than they are today?
As the European Union prepares to welcome up to twelve new members, debate is heating up among the leading candidate countries about whether or not speedy adoption of the euro will promote or impede rapid catch-up growth. But expanding the reach of monetary union raises two equally fundamental questions for current euro members: does formal political independence for the European Central Bank deliver truly independent judgements about policy? If not, will expansion aggravate the problem because the biases of ECB members will become even more divergent than they are today?