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Journal of Economic Integration 2015 March;30(1) :93-120.
Does European History Repeat Itself?: Lessons from the Latin Monetary Union for the European Monetary Union

Ralf Fendel David Maurer 

WHU – Otto Beisheim School of Management, Vallendar, Germany
Swiss National Bank, Bern, Switzerland
Corresponding Author: Ralf Fendel ,Tel: +49 2616509284, Fax: +49 2616509284, Email:
Copyright ©2015 Journal of Economic Integration
Even among academics, it is less known that Europe already witnessed a monetary unification project in the second part of the 19th century. The unification endeavours culminated in the creation of the Latin Monetary Union in 1865, which eventually failed. This paper compares the historical event of the Latin Monetary Union to the current European Monetary Union. More specifically, it searches for differences and similarities between the two monetary unions. We find that even if the specific problems of a monetary union in the 19th century based on a bimetallic standard do not compare to those of a monetary union these days on a more general level, problems are surprisingly alike. In both monetary unions, we observe a lack of enforceable disciplinary measures, inadequate stability criteria, as well as diverging economic and political interests, consequently leading to extensive free-rider behaviour among member states. The study of the Latin Monetary Union and its disintegration suggests that a monetary union can only prevail within a strong regulatory and disciplining framework sharing an overarching vision of its members towards establishing a common political union.

JEL Classification
N13: Europe: Pre 1913
E42: Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
F55: International Institutional Arrangements
Keywords: Latin Monetary Union | European Monetary Union | Monetary Integration
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