Discuss the effects of the reunification of eastern and western ...

[MirandaLo]

Discuss the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighboring European countries.
 
  What will be an ideal response?

Question 2

What prompted the EU countries to seek closer coordination of monetary policies and greater exchange rate stability in the late 1960s?
 
  What will be an ideal response?

[Viet Thy]

Answer to Question 1

Germany: boom, high interest rates to fight inflation. Other European countries: France, Italy and UK in recession, trying to match the high German interest rates to hold their currencies fixed against Germany's, thereby pushing their economies into deep recession. Other European countries tried to continue the fixed exchange rate in order not to lose the credibility they had build up since 1985. The policy conflict between Germany and the other European countries led to a series of fierce speculative attacks on the EMS exchange parities starting in September 1992. By august 1993, the EMS was forced to retreat to very wide ( 10 percent) bands, which is kept in force until the introduction of the euro in 1993.

Answer to Question 2

(1 ) To enhance Europe's role in the world monetary system
(2 ) To turn the European Union into a truly unified market