Table Of ContentINTERNATIONAL MONETARY AND FINANCIAL INTEGRATION
THE EUROPEAN DIMENSION
FINANCIAL AND MONETARY POLICY STUDIES
volume 14
For a list ofthe volumes in this series seefinal page ofthe volume.
INTERNATIONAL MONETARY AND
FINANCIAL INTEGRATION
THE EUROPEAN DIMENSION
Edited by
D.E. Fair and C. de Boissieu
with contributionsfrom:
MichelAglietta Jean Guill
MichaelArtis RolfHasse
GunterBaer DavidLlewellyn
Christian de Boissieu AndreLouw
Ernst-GuntherBroder RainerMasera
Franco Bruni Jan Michielsen
RolfCaesar Marco Pagano
Paolo Clarotti Hans Pfisterer
SylvesterEijffinger Jean-Jacques Rey
Wietze Eizenga Jacques Santer
RichardFreeman J.R. Sargent
MichelGaly AndreSwings
Francesco Giavazzi Geoffrey Wood
AI.
1988 KLUWER ACADEMIC PUBLISHERS
DORDRECHT / BOSTON / LANCASTER -''IIIIIIIl
Distributors
for the United States and Canada: Kluwer Academic Publishers, 101 Philip
Drive, Norwell, MA 02061, USA
for the UK and Ireland: Kluwer Academic Publishers, MTP Press Limited,
Falcon House, Queen Square, Lancaster LAI lRN, UK
for all other countries: Kluwer Academic Publishers Group, Distribution Center,
P.O. Box 322, 3300 AH Dordrecht, The Netherlands
Library of Congress Cataloging in Publication Data
International monetary and financial integration.
(Financial and monetary policy studies ; 14)
Papers presented at the 13th colloquium arranged
by the Soci€t€ universitaire europ€enne de recherches
financi~res held in Luxembourg in Oct. 1986.
1. Monetary po1icy--European Economic Community
countries--Congresses. 2. Finance--European Economic
Community countries--Congresses. 3. European Monetary
~ystem (Organization)--Congresses. I. Fair, Donald E.
II. Boissieu, Christian de. III. Ag1ietta, Michel.
IV. Soci€t€ universitaire europ€enne de recherches
f1nanc1~res.
HG930.S.IS86 1987 332.4'94 87-3622
ISBN-13: 978-94-010-8133-7 e-ISBN-13: 978-94-009-3651-5
DOl: 10.1007/978-94-009-3651-5
Copyright
© 1988 by Martinus Nijhoff Publishers, Dordrecht.
Softcover reprint of the hardcover 1s t edition 1988
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted in any form or by any means, mechanical,
photocopying, recording, or otherwise, without the prior written permission of
the publishers,
Martinus Nijhoff Publishers, P.O. Box 163, 3300 AD Dordrecht,
The Netherlands.
Contents
Preface
IX
Aboutthe Editors and Authors xi
PartA
OPENINGADDRESSES 1
ChapterI Introduction
byJ.R. Sargent 3
ChapterII L'lntegrationMonetaireetFinanciereInternationale
laDimensionEuropeenne
byJacques Santer 7
Chapter III The Implications of International Monetary and
FinancialIntegrationfor the EuropeanInvestmentBank
by Ernst-GuntherBroder 13
ChapterIV LeRoleduLuxembourgdansl'lntegrationMonetaire
Europeenne
byJean Guill 27
PartB
EUROPEAN MONETARY ARRANGEMENTS: THEIR
FUNCTIONINGAND FUTURE 31
Chapter V European Monetary Arrangements: their Functioning
andFuture
by Geoffrey E. Wood 33
vi
Chapter VI The Relative Positions of the Currencies within the
EMSBandofFluctuation: anEmpiricalStudy
bySylvesterC.W. Eijffinger 49
Chapter VII European Monetary Arrangements: their Function
ingand Future
byJean-JacquesReyandJan Michielsen 75
Chapter VIII The ECU and its Role on the European Monetary
Scene
byAndreLouw 91
ChapterIX GermanMonetaryPolicyand theEMS
byRolfCaesar 103
PartC
RELATIONSHIPS WITH OTHER CURRENCIES AND THE
WORLD MONETARYSYSTEM 127
ChapterX AnIncreasingRolefortheECU: aCharacterinSearch
ofaScript
byRainerS. Masera 129
Chapter XI Implications of Closer International Monetary Co
operationforthe EvolutionoftheEuropeanMonetarySystem
by GunterD. Baer 151
ChapterXII PolicyCoordinationandTargetZones
byRichard T. Freeman 167
Chapter XIII Concurrence entre Monnaies et Polycentrisme
Monetaire
by Christian de Boissieu 187
ChapterXIV ExternalAspectsoftheEuropeanMonetarySystem
by MichaelJ. Artis 209
PartD
COSTS AND BENEFITS OF FINANCIAL INTEGRATION IN
EUROPE 221
vii
ChapterXV CostsandBenefitsofLiberalizationofCapitalFlows:
some Theoretical and Policy Issues with Special Reference to the
ItalianCase
by Franco Bruni 223
ChapterXVI Financial Intermediation and Systems: Global Inte
gration
by David T. Llewellyn 239
ChapterXVII CapitalControlsandtheEuropeanMonetarySystem
byFrancesco GiavazziandMarco Pagano 261
Chapter XVIII Costs and Benefits of Financial Integration in
Europe
byRolfH. Hasse 291
PartE
IMPLEMENTATION OF FINANCIAL INTEGRATION IN
EUROPE: CAPITAL FLOWS AND FINANCIAL SERVICES 309
Chapter XIX La Mise en (Euvre de l'Integration Financiere en
Europe; lesMouvementsde CapitauxetlesServicesFinanciers
by Paolo Clarotti 311
ChapterXX ImplementationofFinancialIntegrationinEurope
by Wietze EizengaandHans Pfisterer 333
ChapterXXI FinancialIntegrationinEuropethroughPrivateUse
ofthe ECU
byAndreA.L. Swings 347
ChapterXXII LaPlaceduControledesMouvementsdeCapitaux
a
dans la Politique Economique Fran~aise et les Perspectives liees
sonAllegement
byMichel Galy 359
PartF
REPORTONTHECOLLOQUIUM 383
ChapterXXIII General Report
byMichelAglietta 385
Preface
The papers collected in this volume are those presented at the thirteenth
Colloquium arranged by the Societe Universitaire Europeenne de
Recherches Financieres (SUERF), which took place in Luxembourg in
October1986.
TheSocietyissupportedbyalargenumberofcentralbanksandcommer
cialbanks,byotherfinancial andbusinessinstitutions,bytreasuryofficials
and by academics and others interested in monetary and financial prob
lems. Since its establishment in 1963 it has developed as a forum for the
exchange ofinformation, research results and ideas, valued by academics
and practitioners in these fields, including central bank officials and civil
servants responsible for formulating and applying monetary and financial
policies, national and international. A major'activity of SUERF is to
organize and conduct Colloquia on subjectsoftopicalinterestto itsmem
bers. The titles, placesanddatesofpreviousColloquiafor whichvolumes
of the collected papers were published are noted on the last page ofthis
volume. Volumes were not produced for Colloquia held at Tarragona,
SpaininOctober 1970underthe title 'MonetaryPolicyandNewDevelop
mentsinBanking'andatStrasbourg,FranceinJanuary1972underthetitle
'AspectsofEuropeanMonetaryUnion'.
The previousSUERFColloquium, atCambridgeinMarch 1985, had as
its subject 'ShiftingFrontiers in Financial Markets'. For the presentocca
siontheCouncilofSUERFwasconcernedwithfrontiers whichare notso
much shifting as disappearingorbeingdismantled- the frontiers between
national economies in their monetary and financial activities - under the
heading'InternationalMonetaryandFinancialIntegration- theEuropean
Dimension'. Attentionwasfocused onfouraspects: thefunctioningofthe
EuropeanMonetarySystem;relationshipsbetweentheEMSandothercur
rencies, and the world monetary system; the costs and benefitsofgreater
financial integration in Europe; and the implementation offinancial inte
grationinEurope: capitalflows andfinancialservices.
The Colloquium was attended by 166participants, representing a wide
x
range of financial activities and academic teaching and research in the
financial field. The Chairman ofthe Colloquium asawhole was the Presi
dentofSUERF,MrJ.R. Sargent. Afterhisintroductoryremarks,opening
addressesweregivenbyMrJacquesSanter,PrimeMinisterofLuxembourg
and Dr Ernst-Gunther Broder, President of the European Investment
Bank. At the Colloquium dinner an address was given by Mr Jean Guill,
Director of the Institut Monetaire Luxembourgeois. These contributions
appear in Part A of this volume, Chapters I-IV. The contributed papers
which follow had been distributed beforehand and were discussed in four
separate Commissions meeting simultaneously. The themes of the Com
missionswere: 'EuropeanMonetaryArrangements: theirFunctioningand
Future', chaired by Dr H.E. Scharrer and Professor NielsThygesen (Part
B, Chapters V-IX); 'Relationships with Other Currencies and the World
Monetary System' chaired by Dr Warren McClam and Mr Conrad Reuss
(Part C, ChaptersX-XIV); 'Costs and Benefits ofFinancial Integrationin
Europe' chaired by Mr Michel Lutfalla and Professor Jacques J. Sijben
(Part D, ChaptersXV-XVIII); and 'ImplementationofFinancial Integra
tioninEurope: CapitalFlowsandFinancialServices'chairedbyMrRobert
PiloyandProfessorJ.S.G. Wilson(PartE,ChaptersXIX-XXII).TheCol
loquium reassembled for a final plenary session at which a report on the
proceedings of the Commissions was given by Professor Michel Aglietta
(PartF, ChapterXXIII).
Insomecasesminorchangeshavebeenmadetothepapersbeforepubli
cation.
Asonpreviousoccasionsthe Colloquiumwasstronglysupportedbythe
local financial community. Generous contributions were made by Euro
peanInvestmentBank, KredietbankLuxembourg, BanqueInternationale
a
Luxembourg, Banque Generale du Luxembourg and Caisse d'Epargne
de l'Etat and a reception was given by Deutsche Bank Compagnie Finan
ciereLuxembourg.
The Colloquium was highly successful not only in the quality of the
papers but also in the opportunity it provided for contacts and discussion
between experts from many different countries and financial institutions.
Forthissuccess thanks weregiven to MrPierre-MarieValenne ofBanque
a
Internationale Luxembourg for help in making local arrangements, to
Professor Hans Bosman, the Secretary-General of SUERF and to Miss
Annelies Vugs, the Executive Secretary, together with her assistant Mrs
Tineke Kleine-Vromans, for their excellent organization and ever-ready
assistance.
1March 1987 DonaldE. Fair
Christiande Boissieu
xi
About the Editors and Authors
EDITORS
DonaldE. Fair,Consultant,CityUniversityBusinessSchool,London;for
merly EconomicAdviser, The Royal BankofScotlandGroup
Christian de Boissieu, ProfessorofEconomics, UniversityofParisI
AUTHORS
MichelAglietta, ProfessorofEconomics, UniversityofParisX
Michael J. Artis, Professor, Department of Economics, Manchester Uni
versity
Gunter D. Baer, Assistant Manager for International Economy, Bank for
InternationalSettlements
Christian de Boissieu, ProfessorofEconomics, UniversityofParisI
Ernst-GuntherBroder, President, European InvestmentBank
Franco Bruni, AssociateProfessor, BocconiUniversity, Milan
RolfCaesar, ProfessorofEconomics, Ruhr Universitat, Bochum
Paolo Clarotti, Head of Division, Banks and Financial Establishments,
Commissionofthe EuropeanCommunities
Sylvester C.W. Eijffinger, Assistant Professor of Money and Banking,
TilburgUniversity
Wietze Eizenga, ProfessorofEconomics, LeydenUniversity
RichardT. Freeman, SeniorEconomist,DivisionofInternationalFinance,
Federal Reserve Board, Washington
Michel Galy, Directeur Adjoint, Direction Generale des Services Etran
gers, Banque deFrance
Francesco Giavazzi, Professor ofMathematical Economics, University of
Venice
Jean Guill, Directeur, InstitutMonetaireLuxembourgeois
Rolf H. Hasse, Professor, University of the Federal Armed Forces,
Hamburg
DavidT. Llewellyn,Professor,LoughboroughUniversityBankingCentre
