In light of progress toward deeper integration, the use of separate national currencies among the expanding number of European Union (EU) member states—each managed by a central bank of varying independence and credibility—produced diverse and competing tolerances for inflation that impeded intraregional trade and consequently hindered progress toward a viable single market. Persistent fluctuations in the value of member-state currencies threatened to obscure the increasingly significant flows of intra-EU trade and prevent the efficient allocation of resources and outputs based on member-states’ comparative and competitive advantages. To eliminate these fluctuations, a single currency, controlled by a supranational monetary policy maker, or the European Central Bank (ECB), was established among those EU members willing and able to participate. In crafting a common monetary policy, the ECB’s ...

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