This book treats a number of themes relevant to the design of new monetary institutions in Europe.

It is important to situate the conference relative to events taking place in Europe. Two years before, in April 1989, the Delors Committee had made public recommendations for economic and monetary union (EMU) in Europe, and in December 1990 the EC member countries had convened two intergovernmental conferences, one on EMU and the other on political union. The intergovernmental conference on EMU was intended to lead to agreement concerning the form and pace of monetary union, including necessary amendments to the Treaty of Rome and the statutes of a central bank that would be created to carry out EC monetary policy.

The Georgetown conference thus was held at the very time that politicians, government officials, and central bankers were wrestling with these issues. Though draft statutes for the European Central Bank had been sent to EC ministers in November 1990, a number of issues remained unresolved. These included the exact division of responsibilities of national governments and the central bank – especially concerning exchange rate policy; the need for constraints on national fiscal policies, and how to design them; and the nature of the transition from a system of adjustable parities and a single European monetary policy. The papers of the conference apply the techniques of economics to the practical questions facing policy-makers, and serve both to inform their choices and to help us to understand how EMU, should it be created, will function.