With the creation of the European Monetary Union (EMU) in 1999, the participating member states took a bold step towards further economic and political integration. The development followed the logic of European integration since the Second World War – start with economic integration and political integration will follow. However, the creation of a monetary union implies that member states are giving up national sovereignty and establishing supranational institutions. At the very least a supranational central bank is needed to manage the EMU's monetary policy.

The preparation for the implementation of monetary union was far from complete. The European Central Bank (ECB) was created but other powerful supranational institutions in the EMU were missing. A vacuum developed with insufficient institutions in the EMU to manage its macroeconomic development while reducing room for manoeuvre for macroeconomic policy at the national level. The history of EMU is a history of the ECB struggling with the incompleteness of the monetary union. Cooperation among states could have reduced the lack of institutions in the EMU. However, cooperation was insufficient and became interwoven with the struggle of different member countries to increase or defend their influence and enforce their own economic policy strategy. Germany as the biggest country in the EMU followed hegemonic ambitions. However, its power and willingness to stabilize the whole monetary union was incomplete.

With this in mind, we analyse the history of the EMU and especially the policy and role of the ECB in the framework of macroeconomic management. The first draft of the book was finished in early 2020, just as the Covid-19 crisis hit Europe. We then added Chapter 13 to provide some analysis of the early response to the crisis – as far as this is possible in June 2020.

We would like to thank Alison Howson for support and debates and for her encouragement to write this book. We also thank an anonymous reviewer for helpful comments. Last but not least, we thank Lukas Handley for his technical support.