ECONOMIC AND MONETARY UNION - UNDERLYING IMPERATIVES AND 3RD-STAGE DILEMMAS

On 1 January 1999, the third and final stage of economic and monetary union (EMU) is scheduled to begin. Assuming that the member slates of the European Union (EU) adhere to the terms of the Treaty on European Union, on that day a new European Central Bank will assume full respon sibility for defining the monetary policy of the member states that ha ve moved to the third and final stage of EMU and the conversion rates of the currencies of those member stares will be irrevocably fixed aga inst each other and against a new currency, the euro. This article exa mines some of the underlying imperatives and third-stage dilemmas of E MU. After considering some of the reasons why, despite the high costs associated with qualifying for the third stage, most if not all of the member states perceive EMU to be in the national interest, the articl e considers several of the economic, political, and institutional issu es and dilemmas that are likely to confront the participating member s tates in the third stage.