The Franco-German Dollar Union that Did Not Take Place

Brendan Brown

Chapter 2 in Euro Crash, 2014, pp 23-33 from Palgrave Macmillan

Abstract: Abstract In that wonderful cartoon of Jacques Faizant depicting the historic ceremony in January 1963 at which the Franco-German friendship treaty was signed, President De Gaulle says to Chancellor Adenauer (in their 70s and 80s respectively) ‘hurry up Conrad, you are not immortal’. Adenauer’s hesitation stemmed from concern that de Gaulle was trying to wean Germany away from its close alliance with the US. The real pity of that moment emerges now, almost a half-century later. If only the two heads of state had agreed then on a monetary union between France and Germany. And it would have been so simple given that both countries were on the dollar standard within the context of the Bretton Woods international monetary agreement. The Deutsche mark and French franc would have become fully convertible into each other at the par exchange rate between them (all margins of fluctuation extinguished), while a Franco-German authority would have steered the growth of the monetary base (for the union) so as to keep the common currency within its permitted range of fluctuation against the US dollar.

Keywords: Central Bank; Federal Reserve; Monetary Union; Government Debt; German Government (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-37149-2_2

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DOI: 10.1057/9781137371492_2

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