As the eurozone crisis continues to unfold in 2013, readers of Harold James’latest book will get a better idea of why it is taking so long to put things right. As the subtitle indicates, James appraises the efforts of the Committee of Governors of the central banks of the member countries of the European Economic Community to establish the European Central Bank. The governors met regularly at the headquarters of the Bank for International Settlements in Basel, Switzerland to deal with common problems of monetary policy. The CoG, as James conveniently labels it, was formed in July 1964 with just the original six member states of the European Economic Community represented. As membership of the EEC expanded, so did the CoG's membership, eventually including all twelve European Union members by the time the Maastricht Treaty for European Monetary Union was signed in 1992. The CoG lapsed as a formal group in 1993 as a consequence, but continued to meet and discuss operational details of the implementation of the treaty that culminated with the establishment of the European Central Bank in 1999. Appendices to the book compare the terms of the actual Treaty for European Monetary Union with those proposed by the Committee of Governors, article by article.

James had a daunting task to digest the extended minutes of the CoG and the various subcommittees that were established in response to the ongoing monetary crises that occurred globally but with special impact upon Europe from 1968 through 1992. But he has constructed a compelling narrative that weaves together the personalities, policies, and intellectual developments that led up to the euro-crisis unfolding since 2007. He begins with the intellectual ideas for European monetary union spawned during the first age of financial globalization under Napoleon III in the latter half of the nineteenth century. James continues his narrative after the Treaty of Rome in 1958 by dealing with the political forces within Europe and the international economy that led to the idea of monetary union within the European Economic Community, and therefore to the formation of the Committee of Central Bank Governors. He then takes the reader inside the CoG as the policy conflicts between France and Germany play out with the eventual realignments of the French franc and German deutschemark with the U.S. dollar in 1968. The realignment occurred despite the resistance of the respective central bank governors. Both the French and the German central banks were subject to the will of their political masters, a continuing theme for the remainder of the book.

The bulk of the narrative is taken up by the respective central bankers’ reactions to the continued crises in the international financial system. First, the Bretton Woods system collapsed over the period 1971–1973, leading to the formation of the European Monetary System in 1978 after unsatisfactory experiments with floating jointly against the dollar. This experience led to a period of repeated realignments within the EMS, which led finally to the collapse of the existing system in the political environment of 1992 and the withdrawal of both Italy and the United Kingdom. Both countries, however, remained in the CoG and their interventions in the subsequent meetings provide unusual insights into the initiatives and challenges that central bankers coped with before finally completing the terms of the currency union in 1999.

In the process, the governors raised all of the problems that currently afflict the functioning of the eurozone, starting with the lack of a common fiscal policy even among the members, who do not include all the members of the Single Market, and moving on to the lack of uniform banking regulation. The most ubiquitous and forceful voice was the Bundesbank president. In the end, however, the central bank governor's respective political authorities moved forward on the common currency without coming to terms with these concerns. James concludes that the discussions were valuable in uniting the governors in opposition to the authority of their political masters, leading to their consensus in favor of political independence for the European Central Bank, independence far exceeding that enjoyed by either the Bundesbank or the Federal Reserve System in the United States. Further, while it was the pressure exerted by the politicians by each crisis that broke the stalemate at each stage of the construction of the common currency, it was the growing intellectual consensus among the governors that allowed them to propose and implement an effective response to each crisis.

The common currency eliminates the problems that central bank governors confronted in dealing with exchange rate movements that became increasingly volatile and politically critical. The ECB's independence protects it from daily pestering by European finance ministers or worse. Nonetheless, the Euro-system is ill-structured to deal with the new problems of global finance that have arisen since the end of the Bretton Woods system. These problems include the irrepressible financialization of capital flows that increasingly are channeled through the leading international banks, including European super-banks created by cross-national mergers. These institutions’ relentless search for yield anywhere within the global financial system simply overwhelms the idiosyncratic efforts at prudential regulation by national authorities. The result is that the ECB became, not a “lender of last resort,” which the CoG had resisted valiantly, but an “investor of last resort” in the very securities created as an unintended consequence of its operations. James concludes, “It would be a mistake to believe that 1999, the completion of monetary union, could be a simple and satisfying end to Europe's long struggle over money. It isn't” (p. 400).