Solving the question of the German current accounts in the European setting at first appeared to require some sophisticated and ingenious political mechanism that would force French politicians to do more austerity than they would have liked, and Germans less price orthodoxy than they thought they needed. A political mechanism, however, requires continual negotiation and public deliberation that would have been painful given the policy preferences in the two countries (and in those countries that lined up with each one of the Big Two). The increased attraction of monetary union was that it required no such drawn-out political process. Monetary policy followed automatically from a decision to adopt price stability as a goal. The operation of an entirely automatic device would constrain political debate, initiative, and policy choice.
Sunday, February 17, 2013
Harold James at VoxEU.org explains, and the whole text is worth reading: