creditor central banks have been reluctant to take them, whereas potential users are worried about having to buy back ECUs if the system disintegrates. They also fluctuate in value, depending on the price of gold and the dollar, so they are hardly a stable asset themselves.
ECUs have, however, been adopted by the money markets because of their ability to spread exchange risk among the various EMS currencies. Bank deposits, bank loans, and bond issues have all been denominated in ECUs, and now run into the billions. There have been restrictions on their creation and use, especially by West Germany, but they have proved to be much more popular with the general public than with the central banks, a notion that extends to the expanded loan facilities as well, which have been little used.
It is tempting in summarizing the EMS to call it nothing but a snake of a different color, but it must be admitted that, limited as they are, the movements on the creation of the ECU, the parity grid and divergence indicator, and the EMCF all make for a sense of some advancement on the monetary front. However, without genuine policy coordination, the possibility of a real monetary union is negligible.
The theory of optimum currency areas provides some encouragement to the establishment of a monetary union in the EC, but lack of real policy coordination (rather than foredoomed attempts at fixing exchange rates) prior to the establishment of a common currency, plus international monetary crises, have resulted in little historical success along these lines. Whether a perceived lack of political will is dictated more by a noted resurgence of nationalism in Europe, or merely that the net gain from union would not be large, is not known. What can be said for certain is that the larger the Community becomes, the harder the task will become, perhaps leaving it open to segments of the EC whether it might be worthwhile to form their own optimum currency areas. It is also clear that, without a common currency, the chances for a United States of Europe are nil.