The Euro Crisis from the Perspective of the Preceding Debates on Fixed Versus Flexible Exchange Rates and the European Currency Union

Abstract

To clarify right from the outset: The introduction of flexible exchange rates and the establishment of European Monetary Union are not the consequences of applying economic expertise. The first is a consequence of the normative power of facts: the breakdown of the Bretton Woods System in 1973; the latter a consequence of political wisdom or shrewdness: the Maastricht Treaty of 1992. All economists did was to provide the arguments to rationalize flexible exchange rates (after the breakdown of the Bretton Woods System) and its opposite (absolutely fixed rates) in case of the European Monetary Union. Both should be seen together.