agendas differed dramatically from each other. paasikivi's concern was how to develop a relationship of trust with the soviet union while safeguarding his country's position as a democratic market economy. schuman's big problem, on the other hand, was germany : how to operate so that war between germany and france would be permanently ruled out. on the domestic political scene both men were anxious to prevent the communists from gaining too strong a position. the author of schuman's initiative was jean monnet, a cosmopolitan frenchman, who headed his country's planning commissariat. finnish autonomy in the debate over alsace - lorraine there are, however, similarities between schuman's and paasikivi's respective careers and outlooks. schuman was a native of alsace - lorraine, which was part of germany up to the time of the first world war. he attended school in metz and studied law in munich and berlin. naturally schuman was well acquainted with germany and even served as a clerk in the german army during the war. paasikivi was an influential figure in finland when it was an autonomous grand duchy within the russian empire. he was renowned as an expert on russia. he began his studies specializing in russian language and literature and even spent half a year in novgorod. later on he too was to end up as a lawyer. in the 1910s there was serious controversy in alsace - lorraine over the relationship with germany. political opinion was sharply divided. one group wanted the region to be a fully - fledged german state, whereas the other group aspired to a return to the french sphere. they wanted to see an autonomous alsace - lorraine with its own constitution and government independent of the bundesrat. interestingly enough, the example of finnish autonomy within the russian empire was occasionally brought up in the debate as a sort of yardstick. cognac entrepreneur monnet jean monnet's origin was in the region of cognac. it was in fact jean monnet's father who made monnet a brand name in 1901. the cases of cognac were dispatched from the monnet business to berlin, new york, st. petersburg and london. the thought of the world awaiting these packages fired the young monnet's imagination. the restless schoolboy eventually left school at the age of 16 and set off into the wide world. he first spent two years in london, from where he made for canada and then

also means that the tool kit of monetary policy is more limited than for a single - country central bank. it follows that the moral hazard considerations related to central bank actions in a monetary union are very different in comparison to a single - country central bank. even in a country for example, see christiano, eichenbaum and rebelo ( 2011 ) and the references therein. see brunnermeier, eisenbach and sannikov ( 2012 ) for a recent survey of this literature. two new papers that take the nonlinearities seriously are benhabib, evans and honkapohja ( 2012 ), and fernandez - villaverde, gordo, guerron - quintana and rubio - ramirez ( 2012 ). these papers can be consulted for references to the other literature. bis central bankers ’ speeches with its own central bank, a government may, for political reasons, be occasionally tempted to resort to monetary financing of fiscal costs, even though the inflationary and financial repression cost will fall on its own taxpayers. but surely such temptation is stronger when the bulk of the inflationary cost falls on not just domestic taxpayers but also other countries ’ taxpayers. when the emu was established, it was often suggested that current account positions between members of a currency union do not matter. there cannot be balance - of - payments crises within a currency union. the financial crisis has proved that this view is fallacious. the sovereign debt crisis carries many of the hallmarks of a balance - of - payments crisis. it is by now obvious that a central bank whose job it is to equalize monetary conditions between the crisis countries and the safe - haven countries will inevitably face a formidable task. the tradeoffs the ecb has faced during the crisis range from what is necessary to maintain a sufficient functioning of monetary policy transmission mechanism for the single monetary policy to avoidance of making monetary policy a vehicle of fiscal transfers. the path between the two is full of difficulties, and only time will tell whether the euro system succeeded. v. conclusions if one looks at the history of central banking, it is evident that the objectives of central banking and their balance have changed over time. this movement depends on what are the important objectives of economic policies. before the current crisis the emphasis was on inflation and, depending on the mandate, also more generally on macroeconomic stability. this pre - crisis focus on price stability came in part as a response to the great inflation of the 1970 ’ s. the