TRUST IN THE EURO: EXPLORING THE GOVERNANCE OF A SUPRA-NATIONAL CURRENCY Open Access

The use of money in economic exchange represents a puzzle: Why would anyone actually exchange real goods and services for a piece of paper, a token coin or an electronic blip? This article argues that market participants accept money in an exchange based on the trust that others will do exactly the same. Money represents an implicit guarantee given by the respective community that a particular item is acceptable as a means to settle accounts. Thus, the issuers of money need to establish trust within their respective community in order for the monetary system to operate successfully.

A newly established currency – such as Europe's single currency, the euro – raises the need to create trust in an even more visible fashion. Despite the obvious centrality of trust, neither the general political economy literature on monetary politics nor the contemporary literature on European monetary unification have paid systematic attention to the role of trust in the European monetary integration process. This article represents a first attempt to begin filling this hole. Using the longstanding debate within economic sociology on the nature of money as a catalyst, the article seeks to understand the underlying basis of monetary governance by examining the link between money and trust. The introduction of a new currency – in particular one that is governed supra-nationally – presents a fitting occasion to reassess the fundamental nature of money as a form of societal trust.

This article, therefore, takes a step back from the technical aspects of monetary governance in order to reflect on the nature of trust and on the ways trust in money gets established. The most important goal here is to develop a richer understanding of money. I argue that money is a social construction. Society endows money with value through an interpretive system in which a sign – say, a particularly designed piece of paper – has meaning as money. Arguably, structural forces strongly shape patterns of trust in money. The fact that money is a social construction does not imply voluntarism. Individuals have very little freedom of choice when it comes to using money. Institutionalisation and governmental fiat are key elements in the creation of trust. The legal tender doctrine represents a powerful influence over the behaviour of economic actors. This, however, does not mean that the power of governments is arbitrary. The relationship between money and power is reciprocal. Political authority needs to establish and maintain legitimacy and trust. This is particularly important in the case of a supra-national currency. Euroland lacks some of the features that can assist in the development of trust, such as a strong sense of collective identity, the provision of social benefits or physical security.

The first section of the article elaborates several conceptual dimensions of trust. In its main part, the article investigates the mechanisms that can create trust in money. Most importantly, it distinguishes between horizontal and vertical trust. To explore the horizontal dimension, the second section of the article draws on the concept of mimesis and theories of identity construction. In the case of the vertical trust relationship, the third section distinguishes between the primary agents of trust and various guardians of trust. The European Central Bank and its national component central banks function as the primary agents. Certain institutional players (e.g., national governments, the European Parliament and the Commission) and networks of critical observers (e.g., private financial players, the financial press and academia) exercise guardianship.

In order to understand the mechanisms that create trust in money, we must briefly devote some thoughts to the concept of trust.¹ The first characteristic of trust relevant for our analysis refers to trust as a particular way for human beings to deal with risk that lies somewhere between knowledge and faith.² Trust in money involves a risk in the sense that there exists no absolute guarantee that society will continue to accept money in future exchanges. Knowledge – for example, about a currency's past – may provide useful information for our decision whether to trust or distrust a particular currency. However, knowledge cannot turn a situation of risk into one of certainty. Trust always involves a leap of faith.³ Knowledge can facilitate taking the leap, but it cannot avoid the leap altogether.

The second characteristic of trust relates to the contrast between personal and systemic trust. Trust in money features systemic characteristics. While barter trade may rest on some elements of personal trust between the individuals, monetised exchange is abstract. Individuals often have very little choice when it comes to the use of money.⁴ Money is in essence a system that subjects participants to playing by given rules. As Luhmann (1979): 50) argues, ‘anyone who trusts in the stability of the value of money, and the continuity of a multiplicity of opportunities for spending it, basically assumes that a system is functioning and places his trust in that function, not in people’.

Another feature of trust relevant for our context concerns money's inherent future orientation. As James Coleman (1990) argues, trust is a ‘bet on the future’. Money visibly represents this ‘bet on the future’. A key advantage of money over barter trade is that it bridges present and future. A market participant accepts money in the belief that he or she can use it again sometime in the future. Money increases efficiency because it allows us to postpone a purchase until the need arises, and because money multiplies the possibilities of different exchanges. Engaging in such future-oriented calculus entails, of course, the trust of the individual that the promised value of the currency is compatible to its future value. Today's value of money depends on what economic actors can do with it tomorrow – that is, today's money is really not today's, but rather tomorrow's, purchasing power.⁵ This means that trust constitutes the basis for all three conventional functions of money: as a medium of exchange, as a unit of account and as a store of value. The inherent future-orientation of money also implies that inflation represents the most important enemy of trust and the functioning of money.

The final conceptual element worth mentioning here relates to money's existence as a form of societal credit.⁶ Money represents a claim against the services of society. It entitles its holder to services that have not yet been rendered. In effect, society owes something in return to an individual who has accepted money for goods and services already rendered. Thus, through money, individuals are linked in a relationship of debt to each other. Money creates a bond among the members of the community because, through money, individuals hold a claim vis-à-vis each other. Of course, in the case of the euro that mutual relationship is transferred to an even more abstract society than the individual nation-state – in this case, the euro-area. Thus, it is European society that needs to back up the debt it issued. By definition then, the euro expresses supra-national bonds across Europe.

Treating money as credit also relates to the previously discussed theme of money's inherent future-orientation. Societies that overreach and issue an excessive amount of claims against themselves create distrust because there will be doubts as to whether society can perform the services promised (Skaggs 1998: 456). Inflation then results in a devalued claim against society's goods and services – a severe strain on the bond that money as credit creates between individual and society. Viewing money as credit allows us to make sense of two public debates across Europe during the early stages of the adoption of the euro: that over the euro's weakness vis-à-vis the dollar and that over the perceived price increases that came with the introduction of the euro bills and coins (labeled the so-called ‘Teuro’ debate in Germany).⁷ While most academic observers viewed these public discussions as hype, they revealed a kernel of truth about the euro's nature as credit. The euro's depreciation meant a devalued claim on goods and services and the perceived price increases implied – at least subjectively – a reduced purchasing power of the euro compared to its predecessor currencies. Thus, from the personal perspective of larger portions of the European public, both phenomena violated the trust that is embedded in the euro's nature as credit. Although experts at the time saw neither the depreciation of the euro nor the perceived price increases of the conversion process as threats to the ‘fundamentals’ of the euro, it appears fortunate for the further development of trust in the euro that both public debates have ended. Moreover, it constitutes an irony that the depreciation worries were soon replaced by anxieties over the possibility of too much euro appreciation.

Horizontal trust refers to the interactions among market participants themselves.⁸ The two main mechanisms to be distinguished here are mimesis and identity. Vertical trust, on the other hand, entails the hierarchical institutionalisation of trust through political and other societal agents. I will address that trust dimension in the subsequent section.

Mimesis, a concept used both in psychology and literary studies, refers to the imitation of the behaviour of others.⁹ The formation of trust in this case happens largely through the routine and repetitive interactions of market participants. The use of money reflects in some sense learned behaviour. In addition, mimesis works through memorisation. Mimesis socialises us into using a particular kind of money. The daily use of money leaves relatively little room for deliberate individual decision making. It becomes part of habitual patterns. We become accustomed to particular forms of money and use it without contemplating its significance on a continuous basis. This daily form of trust reveals itself as rather constraining: We rarely have to ask ourselves whether we would like to trust a particular form of money. Daily use places a very high degree of certainty into the existing form of money. In some sense, ‘trust is automatically built up through continual, affirmative experience in utilizing money’ (Luhmann 1979: 50)

In this respect, mimesis shares certain aspects with the concept of familiarity. Familiarity, rather than the more abstract concept of trust, served as a means for traditional societies to overcome the problem of risk. Through socialisation and daily routine we develop familiarity with particular forms of money. In this case, emotional and intuitive factors, beliefs, feelings and a common culture and identity form a partial basis of trust. The importance of these connections becomes obvious in the efforts of monetary authorities to facilitate the positive effects of mimesis through the use of familiar symbols of trust. Banknotes and coins have often featured imagery designed to affirm feelings of trust. Even the shift that Jacques Hymans (2004) observes in the evolution of banknote imagery from depictions of political figures and historical heroes over that of artists and scientists toward postmodern designs fits this mimetic assumption. The historical evolution of banknote designs expresses the need to reaffirm trust in a manner that reflects pervasive cultural forces of the time.

Intuition and imagery, however, do not serve as the only basis of mimesis. Knowledge plays a role as well. Historical knowledge tells people what worked well in the past. In turn, memory provides information about what could work well in the future. Knowledge of a currency's past, for example, would influence the level of trust or distrust we may have in a particular currency. Positive memory provides, so to speak, its own feedback mechanism that reinforces the use of money. Negative memory, on the other hand, can lead to the build-up of distrust.

The introduction of the euro obviously represented a major break with familiar patterns. Suddenly, ordinary users of money, instead of following habitual practices, started contemplating the significance of their daily monetary activity. They had to get used to the new look of coins and notes and had to internalise the new scale of prices and values. Thus, mimesis got disrupted by the introduction of the euro.

This situation forced the European monetary authorities to set in motion a new socialisation process. Memory as a basis for horizontal trust formation was not directly available in the case of the euro. Actually, in countries, such as Germany, where citizens had significant pride in their national currency, memory represented a major hurdle to successful new mimesis. In these countries, socialisation, learning, routine and repetition had to forge new positive memory. Until the euro accumulates its own longer historical track record, memory of the old currency will remain strong for quite a while, and users of the new currency will maintain a vigilant attitude toward the new currency. While this hurdle is not insurmountable, citizens from countries with pride in their national currencies will obviously place high demands on the euro's performance.

Not surprisingly, Germans initially tended to view the euro sceptically and held their own deutsche mark in particular esteem. According to one survey, 65% of German respondents indicated pride in their national currency, making the deutsche mark the symbol of national pride – ahead of cultural traditions, and the national language as well as social and political institutions (Műller-Peters 2001: 174–78). At the same time, the tremendous gain in the support for the euro among the German population in the aftermath of the changeover in 2002 speaks to the successful socialisation to the new currency.¹⁰ As the Eurobarometer data reported in Table 1 indicate, attitudes toward the euro became increasingly more favourable. These aggregate data are supported by various psychological studies as well. As Eva Jonas (2003) reports, ‘handling of the euro seemed to have increased both identification with the new currency and the tendency to distance oneself from the former national currency’. While respondents prior to the introduction of euro coins and bills significantly overestimated the size of the deutsche mark coin and underestimated the size of the euro coin, three months of actual usage of the coins erased these differences. Similarly, the tendency to overestimate prices in euros compared to deutsche marks disappeared shortly after the new bills and coins came into circulation.

On the other hand, memory can easily work the other way around as well. In many high inflation countries, people had been accustomed to distrust their national currencies. There, negative memory of one's own national monetary history promotes positive feelings for the euro. Currencies such as the Italian lira and the French franc hardly served as symbols of national pride. Italian and French citizens were quite eager to turn them in for highly esteemed euros (Burgoyne and Routh 1999). In contrast to Germany, the rest of Europe showed a much lower level of pride in the respective national currency at 45% – compared to the 65% reported for Germany (Műller-Peters 2001: 174–78). In these countries, memory provided much less of a challenge for the new socialisation process.

Two largely symbolic EU decisions underscore the negative and the positive feedback mechanisms embedded in the familiarity issue – the decision to use the name ‘euro’ instead of ‘ecu’ and the choice of Frankfurt as the seat of the European Central Bank. Both the name of the currency and the location of the central bank represent quite trivial issues at first glance. Governments would normally attach much more significance to substantive decisions about how monetary union would operate. In particular, German policy makers historically had been quite willing to make concessions on symbolic and peripheral issues as long as they prevailed on core issues of macroeconomic adjustment (see Moravcsik 1998; Kaelberer 2001). However, in the eyes of the Germans, the term ‘ecu’ evoked negative familiarity with a weak currency. The European Currency Unit (ECU) had been created as the reference system for the European Monetary System (EMS) in 1979. It consisted of a basket of all participating EMS currencies. Since the German deutsche mark tended to appreciate against other European currencies throughout the 1980s, the ECU lost in value against the German currency. The name ‘ecu’, therefore, would have raised unfavourable memories in Germany and could have had negative implications for the required mimesis process in that country.

The process of finding a name for the new currency is telling for the considerations given to mimesis in the monetary integration process. The EU took its decision on the name of the new European currency several years after the adoption of the Maastricht Treaty. The first version of the treaty used ‘Ecu’ as the name for the new currency. At the insistence of German policy makers, the European Commission issued an erratum shortly thereafter, which substituted ‘ECU’ (all in capital letters) for ‘Ecu’ – indicating that the Germans saw this term merely as an abbreviation for the European Currency Unit and not yet as the name of the new currency.¹¹ In the meantime, German officials were searching for a name for the new currency that would be easy to pronounce in all European languages and acceptable to all European societies, that would produce no legal problems and would be symbolic for Europe.¹² It was the Madrid Summit of 1995 when participants finally decided to adopt the name ‘euro’ for the new currency.

A similar logic lies behind the choice of Frankfurt as the seat of the European Central Bank. Frankfurt was (and is) the location of Germany's central bank, the Bundesbank. The Bundesbank had built up an enormous reputation for low inflation policies and a strong currency. As a result, the deutsche mark served as one of the few symbols of German national pride after the Second World War.¹³ Thus, for the Germans, Frankfurt elicits positive memories of money. In order to set the new socialisation process in EMU's most important Member State on the right track, choosing Frankfurt as the seat of the European Central Bank was critical.

On the other hand, the role of familiarity in facilitating trust should not be exaggerated. Familiarity in the sense used above only refers to the surface phenomena of money (say, the form, shape, insignia or depictions of banknotes and coins, the name and symbols of a bank, the daily routine of money transactions, etc.). Very few users of money are truly familiar with money in terms of its substantive characteristics (say, the size of the money supply, the determinants of interest rates and exchange rates, etc.). Assessing the connections between, say, interest rates, exchange rates and inflation rates requires a level of expertise unavailable to many daily users of money. This situation represents an important bridge to the vertical dimension of trust. Familiarity on the surface yields to expertise on substantive questions and trust in institutions. Under conditions of modern complexity, vertical trust relations are a prerequisite for the development of stable horizontal trust relations.

Another important qualification of the role mimesis plays in the creation of trust is that mimesis happens virtually in an automatic fashion – almost reflexively. Mimesis features significant coercive elements. It leaves very little room for voluntarism. We use money because we are by and large involuntarily socialised into it and because the legal tender doctrine shapes our use of money. Even in situations when people abandon a particular currency – such as during times of inflationary crisis – bigger structural forces mold their behaviour. Very little of that activity is voluntary.

Mimesis is very difficult to conceptualise without the influence of the vertical dimensions of trust formation. In particular, under the conditions of modernity, mimesis cannot develop spontaneously. The functional needs of complex societies and markets impose severe constraints on any form of voluntary choices individuals seek to make with respect to money. Economic and political elites have significant tools at their disposal to channel the process of mimesis in particular through institutional means. Despite these qualifications, mimesis remains an important concept to consider in the connection of money and trust. European elites were very much aware of the need to promote positive mimesis to facilitate the acceptance of the euro. Political authorities designed various policy decisions and the aggressive marketing campaign for the euro with the explicit objective of overcoming the problems created by the momentous break with previous socialisation processes. Despite the strong structural power of institutionalised trust, monetary authorities could not afford to ignore the role of mimesis in establishing horizontal trust.

First indications are that these efforts to facilitate positive socialisation to the new currency were quite successful. In November 2004, 52% of the citizens in the euro-zone indicated that the euro did not cause them any difficulty at all.¹⁴ Some 72% of the population felt at ease with handling coins, and 93% reported having no difficulty distinguishing the euro banknotes. Since the introduction of the euro coins and notes there has been a marked rise in the percentage of people using the euro most often as a benchmark for common purchases and a decline in the number of citizens that still calculate mentally in their national currencies for exceptional purchases, such as cars or houses.

Collective identity represents a closely related concept to that of mimesis. As argued earlier, money embodies a claim against society, or, vice versa, stands for society's guarantee to the individual user of money. Thus, money involves collective identity as a prerequisite of trust in the issuing community as such. Identities provide social support for currencies. At the same time, money has frequently defined the boundaries of political and social communities. Over the past hundred years or so, the ‘one nation/one money’ principle largely characterised the geography of money.¹⁵ Each state issued its own money. National identity and national money were closely linked to each other.¹⁶

Collective identity means that individuals define themselves as part of a community. Such an identity, in turn, rests on the distinction between ‘us’ and ‘them’. Identity facilitates trust because the members of a community tend to trust each other more than they trust outsiders. Moreover, the symbols that express common identities are important means to provide support for societal trust. Next to such items as anthems, flags and ceremonies, money has often served as an expression of a common ground among the members of a community. In addition, money requires symbolic, cultural and social sources to develop legitimacy and trust. Not surprisingly, the images on coins and notes have often depicted national heroes or symbols, as well as visions of the nation's essence and true meaning. While modern trust has become largely institutionalised, symbolism still evokes subjective feelings of belonging and provides shared meaning.

Obviously, the euro represents a new form of organising monetary space and raises interesting identity issues. Observers agree that European identity at this point is not nearly as strong as the national identities within the individual nation-states. On the other hand, that is not to say that European identity is non-existent. Identities are complex and do not have one particular identity marker. Conventional social science research too often treats collective identities as zero-sum. European identity comes at the expense of national identity, and vice versa. In reality, European identity is part of increasingly variegated hybrid identities. Although not the dominant form of collective identity, it is part of an intricate mixture of different identity elements. While such a European identity has also seen the evolution of symbols to express Europeanness (such as the European flag and anthem), the euro at this point is arguably the most advanced representation of a community of Europeans. While previous symbols often did not indicate any sense of citizen rights or duties, the euro clearly distributes legal rights and obligations among the citizens of the euro zone.

Observers have frequently criticised the images of euro coins and bills as embodying only very vague symbols of such a common identity. The bank notes do not feature any concrete entities, such as historical individuals or identifiable buildings. Servet (1999: 29), for example, argues that it is ‘extremely difficult for users to identify with these images as a part of a group – in other words, involved in a joint project; only the map of Europe will show this aspect of the joint project’. The ‘users of the new payment instruments will need a lot of imagination to recognise in them the affirmation of the European community of people as a joint political project and as a principle of solidarity’ (Servet 1999: 47) In other words, do the euro notes provide Europeans with the feeling of belonging to a community?

Despite this widespread scepticism, I argue that it is possible to interpret the design of the euro notes as deliberate efforts to connect common threads in European history and to construct the bare bones elements of a European identity. The euro bank notes portray European identity as part of a broader civilisational configuration. The depiction of architectural styles and historical periods from classical antiquity, over the medieval period to modernity anchor Europe in common roots and the experience of common historical trends.¹⁷ While these illustrations remain abstract, they do not alienate national feelings and allow all users to define themselves as participants in European civilisation. Many Europeans recognise in them ‘their’ bridges, doors and windows. In fact, the very openness of the design represents a strength rather than a weakness. It suggests the principal inclusiveness of the idea of Europe and the potential to fill the idea of Europe with shared as well as variegated meaning over time (Shanahan 2003).

Moreover, it is fair to say that the euro symbolically reflects the economic reality of a European economy that has grown closer and closer together. While this should not be misunderstood as an economic reductionist argument, Europeans are quite aware of the fact that their economic destiny (and with it, partially their political fate) is strongly tied to each other. Arguably, economic integration has become part of the collective identities of many Europeans. The euro in part expresses this reality, and serves as an engine for the future construction of a broader European identity.

Admittedly, Europe is a rather broad community. However, it is worth noting that political order even within established nation-states rests on quite abstract constructions of identity and community. Nation-states have historically competed and co-existed with other local, regional and supra-national identities. Today, systemic functions increasingly provide the basis for community rather than deeply shared cultural traits and values. Moreover, anything that is left of a value consensus within many of the existing nation-states tends to get reduced to core elements of European civilisation (Jalava 2003: 186). Whatever exists as a value consensus among the citizens of a nation is often quite compatible with a value consensus among the community of Europeans.

In addition, the threshold of collective identity required to sustain trust in money is not very high. The successful functioning of money does not require deep emotional and affective ties as prerequisite (Kaelberer 2004). Successful exchange relations can be an important engine for community building. Even the contemporary nation-states could not have forged national feelings of belonging without demonstrating their capacity to provide functions expected of them – such as security and the political framework for economic exchange. If the European nation-state had not been successful in fulfilling its functions, national identities arguably would be much weaker today. National identities are as much a constructed form of identity as an emerging European identity.

Vertical trust formation is hierarchical and develops through institutionalisation and network effects. In abstract and impersonal relations of trust, the state and formal organisations often substitute for kinship and personal familiarity. To understand the significance of vertical trust formation, it is important to recall our definition of trust as a relationship that arises out of risk. Simply speaking, institutions reduce the risk that is involved in conferring trust. If the monetary authorities are trustworthy, individuals have greater assurance that the risk involved in accepting money in an economic exchange remains minimal. Institutional mechanisms replace feeling and intuition as the basis of trust.

Key to understanding the emergence of vertical trust is a broader conception of what we mean by institutions. It is imperative to avoid limiting the trust question merely to a central bank and possibly a few other government-related organisations. The governance of money occurs within a reciprocal interaction between core institutions and the surrounding network environment. In the following, I distinguish between the primary agents of trust and the guardians of trust, which consist both of ‘official’ political institutions and ‘unofficial’ societal players.¹⁸

The newly established European Central Bank (ECB) and its component parts, the national central banks, obviously represent the core institutions of building new vertical trust in the euro. Three key elements form the basis of the ECB's authority: its legal status, its expertise and its embeddedness in the political and social environment. First, official acts of legislation (in this case, the Maastricht Treaty as well as national legislation) put the ECB and the national central banks into the position of serving as the main agents of trust. The democratic institutions of the nation-states entrusted the ECB with the specific function of running monetary policy. The rights to issue legal tender, to determine interest rates and to provide banking supervision serve as the primary expressions of this legal status. The focus on low inflation and the guarantee of central bank independence from the influence of other political institutions represent core elements of this mandate.

Thus, the authority of the ECB rests to some degree on the exercise of state power. The euro was introduced ‘from above’ largely by elite action, whereas the general public remained passive and often maintained a skeptical attitude toward the project. The elitist character of the euro introduction, however, hardly represents a novelty in monetary transformation processes. The national currencies were also creations ‘from above’. In fact, the lack of contention and political turmoil accompanying the introduction of the euro is remarkable in comparison to the upheaval created by some of the nineteenth-century national monetary unification processes.¹⁹ In any case, the authority of the ECB derives initially from an act of political fiat. Thus, a continued commitment by European governments to the euro remains the most important, but by no means sufficient, foundation for the maintenance of vertical trust in Europe's single currency. In this sense, the euro is less of an innovation than it might appear at first sight: unlike the prospect of privately issued electronic money, for example, the euro is still a ‘territorial’ currency and one explicitly backed by state power. The only difference to conventional national currencies is its supra-national governance.

However, state power is not the only source of vertical trust. Alongside the legal foundation, a second element of a central bank's authority is expertise and competence. Under conditions of greater complexity, abstract trust relations increasingly demand the input of expert knowledge (e.g., Luhmann 1979). Overall, this leads to the apparent irony that it is easier for individuals to accept expert authority the more opaque is the given issue area. Essentially, the relationship of trust to money emerges out of two seemingly contradictory conditions. On the one hand, we do not know enough (risk); on the other hand, there is too much to know about money (complexity).²⁰ Under these conditions, standards of effectiveness and economic success rather than empathy, familiarity or intuition represent the key criteria for judging the trustworthiness of agents. In the end, the track record decides whether we trust or distrust the authority of the central bank. Hierarchical trust is driven by a functional logic. Success or failure in fulfilling its function will present the cornerstone for the central bank's ability to establish trust.

A third element of the central bank's position of authority depends on the interaction with its broader political and social environment. I will address this aspect of authority in my subsequent discussion of the so-called ‘guardians of trust’. Trust is generated by a successful embedding of the ECB into this environment. Even within that environment, however, success serves as the primary basis for authority.

It is impossible to assure a currency's legitimacy simply through the legal act of founding a central bank. Instead, legitimacy needs to be established through complex processes between the money-issuing institutions and their broader societal environment. Fiat is the most important starting point for a currency's legitimacy. However, it is not a sufficient condition. Rather, a currency must earn its acceptance within the community. As is typical of abstract trust relations, those bestowing trust are not in a position to evaluate fully the performance of the trustee. This situation requires the emergence of guardians of trust. The ECB is embedded in a network of guardians from both the political and the societal sphere.²¹ Various political institutions serve as institutionalised guardians of trust. Most important among them is the European Parliament, which exercises oversight rights, but it also includes the European Commission, the Council of Finance Ministers as well as national governments and parliaments.

Compared to traditional national central banks, the ECB has something of a disadvantage when it comes to the question of its network of guardians. The euro-zone does not represent a pre-existing political community. Payment community and political community (EU or nation-states) do not overlap. No direct political counterpart to the ECB exists that resembles the back-and-forth between national governments and their central banks. On the European level, we have a certain power gap between the ECB and political authority (e.g., Hodson and Maher 2002). The relationship between the ECB and its political and social environment must still develop and mature.

On the other hand, the Europeans have arguably come a long way in institutionalising elements of guardianship over the trust relationship inherent in EMU. The European Parliament (EP) has evolved into an effective partner for the ECB in demonstrating openness and establishing some kind of accountability. As Jabko's (2003) detailed account demonstrates, central bankers do not operate in a vacuum. They interact with their environment. In the case of the relationship between the EP and the ECB, the specifics of accountability procedures become subject to negotiations between players, with the two institutions ultimately establishing a modus vivendi in their relationship to each other.

In addition to the EP, the EU Council of Ministers, the Monetary Committee and the Commission play important roles in their own right, as do the national governments and parliaments. As the debate over the deficit criteria of the stability and growth pact indicates, none of these institutions are merely pushovers of the ECB. In turn, national governments did not succeed in sidelining the ECB. Fears that the disagreements over the stability and growth pact as well as other matters of macroeconomic policy represent the first concrete signs of isolating the ECB in a vacuum of narrow monetary functions are most likely exaggerated. Similar conflicts between governments and central banks took place routinely within nation-states before EMU and did not cause doubts over the sustainability of the national monetary order. Instead, a healthy public debate between the different institutional players over policy priorities will most likely prove much more stabilising to the money-trust relationship embedded in EMU than a false sense of agreement. As long as national governments remain credibly committed to entrusting the ECB as the primary agent of public trust in money, public dialogue provides an important accountability function that exposes the policies of all players involved to open scrutiny.

Beyond the political sphere, important societal players serve as guardians of trust, including, most importantly, private financial institutions, but also other market actors. In addition, the media and academia fulfill crucial roles in establishing an attentive public sphere, which in turn is critical for the formation of trust. Obviously, the ECB is not yet as fully embedded in the European banking and financial community as national central banks are with their country's financial network.²² However, interests dictate that the European financial community would provide strong guardianship for trust in the euro. It has a manifest interest in a functioning currency. If the ECB could not provide such a good, the European financial community would demand a correction.

The media and academia provide influential public or semi-public fora for the discussion of monetary policy. Since the authority position of central bankers rests on expertise and not elected office, public scrutiny through the media and academia represents a vital method of assuring accountability on the part of central bankers. The large disparity in expertise bestows the media and academia with important transmission functions between monetary authorities and the general public. While there does not yet exist a European public on monetary policy in a true sense, the growth of the Financial Times, for example, into a European-wide ECB and EU observer can stand for a first step in that direction.

Similarly, the relationship between academia and central banking can serve as a stabilising force for trust in the euro. Central bankers have been thoroughly socialised within the academic discipline of economics. Both the crossover in personnel between academia and central banking, as well as the feedback that academic discourse and research can provide for central banking will keep connections between the two areas wide open. While central banking often appears secretive to the public, central bankers will have a tough time escaping the scrutiny of their academic colleagues. Because their position rests on expertise, academic dialogue provides an important check on potential abuse of power by central bankers and a significant means to assure accountability. Often such horizontal control provides a more effective check on the abuse of power than direct control through citizens.

There can be no doubt that the broader public in the ultimate sense represents the most relevant community to bestow trust on monetary authorities. However, many elite actors and institutions on various levels strongly mediate the realm of money. Thus, there exists little room for voluntaristic action on the part of the public at large. It remains highly structured by the interaction of agents and guardians of trust. The political and social network that surrounds the ECB will remain the most decisive force in shaping the public's trust in the euro.

All too often, we take trust in money as given. The introduction of the euro represents an opportunity to reflect more thoroughly on the relationship between trust and money. Not only is the euro a completely new currency and the ECB a newly founded institution, EMU represents a unique experiment in governing a supra-national money. It, therefore, lacks some of the political and cultural factors that help facilitate trust in single nation-states. How can we conceptualise the formation of trust in the euro under these circumstances? This article has outlined a conceptual map to the relationship of money and trust. Among the mechanisms to establish such trust, the article distinguished between horizontal and vertical trust. Institutions bestowed with formal rights to make monetary policy have been keenly aware of the need to create legitimacy. Producing a smooth transition toward horizontal and vertical trust in the euro has been a key for the successful transition to the euro so far.

These considerations make clear that the formation of trust in the euro is an extraordinary development. If the euro ultimately becomes fully accepted and trusted, monetary authorities achieved this feat against some formidable odds – for example, the need to change abruptly prevailing mimetic behaviour, the lack of strong affective identity within the EU and the division between supra-national and national institutions and actors. The difficulties of establishing trust are a reminder that changes in the global monetary geography face significant constraints. The analysis in this article suggests caution with regard to popular expectations that private issuers of electronic money may soon replace state actors as the primary monetary authorities. Trust is a large public good that will be very difficult to establish for private actors. Moreover, the requirement to establish trust will make it extremely difficult to envision other negotiated currency unions outside of Europe anytime soon. Most importantly, the need to develop a network of guardians of trust poses significant problems for those interested in changing the prevailing monetary order.

Matthias Kaelberer is Associate Professor at the Department of Political Science, University of Memphis, Tennessee, USA.