Ideas and the Euro: Rethinking Credible Commitment

This paper is an attempt to go deeper into the credibility story underpinning European Monetary Union (EMU). Our key premise is that credibility arguments have been widely advocated, but not properly accounted for. Moreover, dominant explanations (including ‘economists’ versus ‘monetarists’) masks serious credibility concerns. To fill this gap, we propose a novel analysis which combines theory and narratives. Theoretically, we develop a more ‘political’ account of monetary regimes based on theories of credible commitment and self-enforcing institutions. Empirically, we provide a systematic comparison of three key moments of European monetary integration: the EMS, Maastricht, and the Eurozone debt crisis. Our ultimate goal is to contribute to the growing literature on the ideational political economy of EMU. We also seek to engage critical debates about the future of the euro.