This chapter provides a historical overview of the evolution of European cooperation. It first sketches the historical background to several initiatives for international cooperation after the Second World War. It then discusses the way the EU evolved from the initial founding of the European Coal and Steel Community into what is now the European Union. In doing so it looks at the evolution of its policies, institutions and membership over the decades and highlights major international events and crises that affected developments. The chapter shows that the process of bringing the European countries together was long and winding with many fits and starts. Periods of rapid change and innovation have alternated with long stretches of gridlock and stalemate. The process was often erratic because of fundamentally different views on the nature, pace and scope of integration. While the term ‘European Union’ suggests that the organization was swiftly put in place on the basis of a solid design, the EU in essence is a patchwork that has been stitched together in a step-by-step fashion over the course of seven decades.

This chapter discusses the currency union’s original set-up. It first discusses the history of European monetary integration, distinguishing between two sorts of motives: one economic, the other political. From the establishment of the European Economic Community up until the Treaty of Maastricht, both have been important drivers of monetary integration. The chapter subsequently turns to the original legal set-up of the euro, in particular its internal policy dimension. The economic and political forces behind the currency union’s creation also exercised great influence on its set-up, which came to institutionalise a stability paradigm. Characteristic of this paradigm was that it granted overriding importance to price stability as a policy goal and argued for a privileged position of the central bank in achieving this. The chapter shows how its influence was most notably evident at the level of aims and principles and in the constitutional position of the European Central Bank. Yet it also shaped the single currency’s economic foundations, in particular, the Union’s limited competences in this area and its focus on fiscal prudence. It even informed the rules governing accession.