OF THE PROBLEMS
The purpose of this short introduction to the panel discussion is to raise two questions without really trying to answer them. The first of these, to which I shall devote most of my time, is whether recent experience with the working of the adjustment process (or its failure to work) warrants a reappraisal of current negative attitudes to regional monetary integration--especially in Western Europe. In addition, I shall consider briefly the implications of any such reappraisal for worldwide monetary management and, more specifically, for relations between the dollar and European currencies.
In what follows I propose to use "monetary integration" rather loosely, by insisting on two minimal features of an integrated monetary area: a greater stability of exchange rates within the area than between its members and third countries; and a high degree of freedom within the area for payments on current- and capital-account transactions.
Even on this deliberately loose definition it is clear that little has survived of earlier attempts at promoting monetary integration within the European Economic Community (EEC). A cursory glance at exchange-rate graphs (Figure 1) suggests that the four large Western European economies--France, West Germany, Italy, and the United Kingdom--have been moving away from integration rather than toward it. That is true not only for the diverging trends of exchange rates but also for the great number of restrictions on capital movements introduced by these countries, which apply to intra-EEC payments as well as to payments with third countries. Admittedly the snake has withstood quite a few adversities, but since it has been reduced to little more than a deutsche mark zone, it can hardly be regarded as a "natural" nucleus for a broader revival of European monetary integration. On the whole, it is probably correct to say that today predominant attitudes toward monetary integration within the EEC range from skepticism about its feasibility to doubts about its desirability. This is indeed a far cry not only from the visionary hopes of the 1960s but even from