Transforming the European Central Bank into an international settlement institution: The Keynes Plan revisited

Sergio Rossi

Chapter 7 in Central Banking, Monetary Policy, and the European Central Bank, 2025, pp 134-146 from Edward Elgar Publishing

Abstract: This chapter focuses on the monetary–structural needs to provide for payment finality at the international level within the euro area, in light of the flaws of the TARGET2 system as shown by the euro-area crisis that burst near the end of 2009. The first section explains the monetary–structural origins of such a crisis, which are to be found in the TARGET2 system. The second section points out the conceptual difference between the European single currency (the euro) and a much-needed common currency in Europe, so much so that the monetary policy decisions taken by the European Central Bank are not appropriate for all euro-area countries. The third section expands on the workings of the European Central Bank once the latter becomes an international settlement institution – which is essential to make sure payments are final between any two euro-area countries. The last section concludes with some political-economy remarks about the feasibility of such a monetary–structural reform in the spirit of Keynes's (1944) Plan.

Keywords: European Central Bank; European Monetary Union; Keynes Plan; Monetary integration; Payment systems (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035324262
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