The European Payments Union (EPU) functioned successfully for nearly eight years, from its establishment on 1 July, 1950 to its dissolution on 27 December, 1958, when current account convertibility was restored by the participating states. This experience inspired several proposals for an EPU-like arrangement following the fall of the Berlin Wall and the collapse of the Soviet Union. In retrospect, these proposals were misguided: whereas the nations of Western Europe were seeking to draw together after World War II into an economic community, the successor states of the Soviet Union were seeking to loosen their regional ties in favour of stronger links with the rest of the world. Be this as it may, these recent invocations of the EPU leave no doubt that Europe’s experience in the 1950s continues to cast a long shadow.
The EPU was one of several post-war institutions of European economic cooperation that can trace their origins to the Marshall Plan (Bielet 1956, Carli 1981). The U.S. saw the Marshall Plan as a device for fostering the integration of Europe and required as a condition for the disbursal of aid not only the dismantling of intra-European trade restrictions and the coordination of national recovery plans but also agreement on the part of the recipients on how to allocate the payments. The venue in which this was to be achieved was the Organisation of European Economic Cooperation (OEEC). Despite U.S. participation as associate member of the OEEC, the EPU and the OEEC were essentially European entities. They were mechanisms for European countries to exert peer pressure not unlike the one that is at the heart of the multilateral surveillance procedures of the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS). Insofar as the Economic and Monetary Union (EMU) is a descendent of the EMS, it can be said that the lessons of the EPU continue to be practiced today.