Abstract
For many people, in favour of the EMU and the sceptics of EMU alike, the single currency points is inescapably part of the political union. Looking at past history, monetary unions linking independent states of dissimilar size and power (like that of Belgium and Luxembourg today) have not been uncommon. But there has so far never been one enduring monetary union of strong independent states. This, and the commitment of a number of key EU member governments to further political integration, suggests that over time EMU could indeed favour federalism. Yet in theory, there seems to be no compelling economic reason why this should be so. The decision of the 'political union' remains essentially a matter of political choice. The crucial point is that the EU is already a federation, albeit a loose one. Adopting the single currency means, by definition, surrendering national control over monetary policy, but no further loss of national sovereignty would necessarily be bound to follow. Europe's government may well choose that course. Or they may choose otherwise. Participating in EMU does not pre-ordain that decision. The UK has three possible strategies for EMU: decide to join in a few years time, wait and see, according to the approach adopted by the Major's government, or finally decide not to join.
