US-EU Monetary and Financial Relations. Complex Interdependence Under Financialization

Has the Euro made Europe less exposed to financial and monetary instability originating in the US? Are Transatlantic monetary and financial relations as fractured as in they are in trade and security? We argue that the best answer to both questions is no: The birth of the Euro and the onset of financialization are two major structural changes after the Bretton Woods phase of American hegemony, that have off-set each other. The EMU - with its inherent weaknesses not-with-standing - has decreased its members exposure to currency turmoil, while financialization have created new dependencies between European banks and US financial markets. The subprime crisis revealed that the two continents are enmeshed in a relationship of financial interdependence, and crucially, when push came to shove in 2008, it became clear that in matters of financial stability the US was still the hegemon and, in this issue area, functionally benevolent.