Such imbalances can continue to be dealt with through fiscal transfers within member states. Political integration is defined by the nature of the political system in which the transfers are made and the strength of the political interests underpinning them-not by the transfer itself. In other words, policies do not make polities. The European polity, such as it is, has arisen from the common experience of war, from an ill-defined European culture and from shared objectives of peace and prosperity. EU policies, no matter how important, have little direct impact at this level.
Policies reflect the political systems from which they originate.
Therefore monetary union reflects the features of the EU political system that designed it. Nor is the euro burdened by the legacy of past policy errors, as is sterling. The credibility of the European Central Bank stems from the EU's capacity for independent economic regulation, as reflected in the performance of the European Court of Justice and the Commission. But EMU's design acknowledges the limitations of the EU political system. So EMU will always rely on the superior capacity and legitimacy of the nation state.