Germany's new European hegemony is a product of the European Monetary Union in combination with the crisis of 2008. It was not Germany, however, that had wanted the euro. Since the 1970s, its export industries had lived comfortably with repeated devaluations of the currencies of Germany's European trading partners, in response to which much German manufacturing moved out of price-sensitive and into quality-competitive markets. It was above all France that sought a common European currency, to end the humiliation it felt at having to devalue the franc against the deutschmark and, after 1989, to bind united Germany firmly into a, hopefully French-led, united Europe. From its conception, the euro was a highly contradictory construction. France and other European countries, such as Italy, were tired of having to follow the hard-currency interest rate policy of the Bundesbank, which had de facto become the central bank of Europe. By replacing the Bundesbank with a European central bank, they expected to recapture some of the monetary sovereignty they felt they had lost to Germany. Clearly the idea was also to make monetary policy in Europe less obsessed with stability and more accommodating of political objectives like full employment. At the same time, Mitterand and his finance minister Jacques Delors, but also the Bank of Italy, hoped to gain political clout against national Communist parties and trade unions by foreclosing external devaluation and thereby forcing the Left to renounce its political-economic ambitions under the constraints of a harder, if not hard, currency.
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