THE MAASTRICHT TREATY AND MONETARY UNION IN EUROPE: A THEORETICAL GAME ANALYSIS

Abstract

This essay focuses on European monetary unification to be completed before the 21st century (1999). In December 1991 in the Dutch city of Maastricht the German Central Bank (Bundesbank) clearly showed that it intends to set and influence the economic policies of all of Europe. Utilizing Game theoretical analysis this paper argues that for Germany a policy of noncooperative leadership is the best strategy. However, for the rest of Europe gaining German cooperation in setting monetary policy is in the community's overall interest. Given the long run need to coordinate policy in a unified Europe, the Bundesbank will cooperate with the rest of EC members. Until the final outcome of this union becomes known, a climate of uncertainty will hover over financial management practices.

Citation

Ghannadian, F.F. (1994), "THE MAASTRICHT TREATY AND MONETARY UNION IN EUROPE: A THEORETICAL GAME ANALYSIS", International Journal of Commerce and Management, Vol. 4 No. 3, pp. 25-35. https://doi.org/10.1108/eb047292