European Monetary Union

Claudia Kwapil/Kilian RiederJuly 19 – July 304 ECTS credits


In no other area has European integration advanced as much as in the monetary sphere. By joining the European Economic and Monetary Union (EMU), 19 countries of the European Union have given up their national currencies and their monetary sovereignty and have created a common monetary area with a joint central banking system (Eurosystem) and a common European currency (euro). On the one hand, the euro – in form of notes and coins – provides a strong common European symbol. On the other hand, it is a powerful policy instrument.


The financial, economic and debt crisis that has shaken up euro area countries revealed the power of monetary policy. Starting in 2008 the Eurosystem has implemented a series of unconventional monetary policy measures ranging from negative policy rates to asset purchase programs. More recently, during the COVID-19 crisis, monetary-policy support for the European economy was again in demand and the Eurosystem continued to expand its toolbox of unconventional monetary policy measures.


After having successfully completed the course, you will be able to answer the following questions: 

  • Origins and motivations for a European single currency
  • What is the Eurosystem’s monetary policy mandate, and why?
  • Is the European Monetary Union beneficial for all 19 countries forming it, or more so for some than for others, and why?
  • What are the necessary preconditions to make membership in a monetary union a success for a country?
  • What role does monetary policy play in the division of responsibilities between fiscal policy, structural polices as well as (micro- and macro-)prudential polices?
  • How do negative policy interest rates work?
  • How does monetary policy influence my daily life?
  • Will the ECB’s (and other central banks’) asset purchase programs create inflation?
  • What are future challenges for the ECB and for central banks at large?


Requirements: Active class participation (20%), mid-term exam (40%) and final exam (40%).


This course is regularly organized with the support of the Oesterreichische Nationalbank (Austrian Central Bank).