With Europe' financial crisis, Europe's economic and monetary union is again at the centre of many economic policy debates. The crisis further illustrates the importance of history in understanding the roots of the present situation. This book, which was commissioned by the European Central Bank and the Bank for International Settlements, offers an overview of the history of the Committee of Governors of the Central Banks of the European Economic Community and their contribution to the process of European monetary integration. It is based on extensive archival research (benefiting from a waiving of the 30-year rule on access), sourced not only from the archives of the Committee of Governors but also others, like those of the Delors Committee, the Monetary Committee and several national central banks.

Harold James describes the objective of the book as to examine ‘the whys, whens, hows, whos, and what-ifs of the process of making the European monetary union’. James puts considerable emphasis on the international dimension of the EMU project. This comes very clearly to the fore in the answers he gives to the first two questions. ‘First, why? The major theme of this book is that the quest for European monetary coordination and then for union was a response to genuine (and still-existing) problems of currency instability and misalignment at the international level. It was not simply (as it has often been represented) a fundamentally political project “to make a future European war impossible, and to set the stage for a federal United States of Europe”’ (p. 1). The second question is when? In James' view, ‘The push to devise a European solution was particularly intense when global imbalances (also reflected in the emergence of large German current account surpluses) threatened the international system in the late 1960s, the late 1970s, and the late 1980s’ (p. 2). As for the third question, by whom?, James goes extensively into the role of the central bankers. ‘They designed both the road map for how to get monetary union (in the work of the Delors Committee) and the actual operationalization through the statutes of the new European Monetary Institute, the future European Central Bank, and the European System of Central Banks’ (p. 2). He contrasts this with the situation in the late 1970s, when ‘politicians took charge of the process of finding solutions, and launched high-profile initiatives (the European Monetary System, EMS). But the results were disappointing’ (p. 2). Turning to the fourth issue, the problems and risks of EMU, he argues that ‘there was imperfect agreement on crucial aspects of the monetary union, in particular fiscal rules and banking supervision and regulation. Both these issue areas raised political concerns about loss of national sovereignty and about the redistributional consequences of Europeanizing a fundamental part of economic policy-making’ (p. 2).

The book starts with an Introduction (entitled ‘The making of a non-national currency’, also with a comparison with the United States) and a short first chapter (‘A Napoleonic prelude’). Thereafter, James follows a chronological approach. He discusses ‘The origins of the Committee of Governors’ (from the Rome Treaty to the end of the 1960s), ‘The response to global monetary turbulence’ (Europe's monetary plans at the turn of the 1970s, including the Werner Report), ‘The snake and other animals’ (the 1970s), ‘Negotiating the European monetary system’, ‘The malaise of the 1980s’, ‘The Delors Committee and the relaunching of Europe’ (a very vivid chapter, in which he describes Karl-Otto Pöhl, the President of the German Bundesbank, as ‘the loosest of the cannons on the deck of the Delors Committee’ (p. 239), ‘Designing a central bank’ (a very important chapter) and ‘The EMS crises’ (with important parallels with the present crisis in the euro area). In his conclusion, he discusses the functioning of the euro and the legacy of the Committee of Governors. The emphasis is very much on the last three chapters, the period from 1987 to 1993, which take up 170 of the 400 pages of this historical account of EMU. There are also several appendices. The book is strongly narrative in nature. For instance, in the chapters on negotiating the EMS and the malaise of the 1980s, each about 30 pages long, there are no subdivisions.

The strength of this book is very much the elaboration of the international dimension. Harold James is well aware of the need to place European monetary integration in the context of international monetary developments. James also pays a lot of attention to the Bundesbank, with extensive quotations of the minutes of the Bundesbank Council. This is certainly appropriate as the Bundesbank was a crucial player in the process of European monetary integration. Something which comes less well to the fore is how Helmut Kohl succeeded in binding the Bundesbank into his EMU project, in stark contrast with Helmut Schmidt's earlier more confrontational (and less successful) approach. As observed by James, ‘There was a great deal of policy innovation in 1978, but the CoG [Committee of Governors] stood on the sidelines. Often its role was more one of erecting obstacles than of cheering on the process. In this respect, the innovations of 1978 were strikingly different from those of the late 1980s, when the role of the CoG was central to the process of policy reform and innovation’ (p. 147). Kohl's relationship with Delors, which was crucial for the establishment and mandate of the Delors Committee, does not come to the fore, for instance in Delors' short portrayal (p. 213). Sometimes, I would have given more weight to specific European aspects of the monetary integration process. For instance, concerning the monetary dimension of the Rome Treaty, James observes, ‘These sections seemed to echo another document that had been ratified as a treaty, the Articles of Agreement creating the International Monetary Fund. This is yet another of the cases in which the regional and the global stages of integration marched in parallel’ (p. 41). However, he does not mention the Franco-German discussions on the Rome Treaty, with Germany stressing the responsibility of each country for its balance of payments, and France (which had significant balance of payments problems at the time) arguing for the mutual assistance procedure, safeguarding clauses and the creation of the Monetary Committee.

At times, there are inaccuracies in the book. For example, James writes that ‘All the member countries were represented in the CoG (with the exception of Luxembourg, which was already in a de facto monetary union with Belgium)’ (p. 22). However, as also mentioned in Appendix 1, from January 1974, the President of Luxembourg's Commissariat au Contrôle des banques also participated in the meetings. It is further mentioned that only two EEC central banks, the Nederlandsche Bank and the Banca d'Italia, were responsible for banking supervision and regulation (p.113). However, given the interrelations between the Commission Bancaire and the Banque de France, with the Governor of the Banque de France at the head of both institutions too, many observers give at least a de facto role to the Banque de France in these matters. An important issue in the functioning of the EMS in countries like Italy and France was the external discipline which it imposed. ‘The attraction of an externally imposed monetary regime lay in the limits it imposed on coalition politics, and in consequence it could be interpreted as a mechanism for strengthening the executive’ (p. 198). James further argues that ‘Politics operated in a rather different way in Germany, as well as in the smaller European countries. German governments, though also based on coalition, offered a higher degree of political coherence, and correspondingly less of a need (or a willingness) to refer to outside restraints’ (p. 198). While I agree very much with his assessment of Germany, I have some doubts with regard to smaller European countries, certainly Belgium.

As argued by Harold James, the Committee of Governors has played a crucial role in the construction of EMU. On the whole, this important book provides a good overview of the contribution of the central bankers to the process of European monetary integration, especially in placing it in the context of the international monetary system.