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The turmoil that engulfed the European monetary system in 1992 and 1993 extinguished the sense of inevitability that the project for economic and monetary union had acquired. The exchange rate crisis led many to conclude that monetary union had been derailed once and for all. This article argues, in contrast, that the monetary crisis did not prove that monetary union was undesired or unworkable. The travails of the exchange rate mechanism did not undo the interests that originally drove the economic and monetary union project or erase the gains it would bring to some member states. The crisis did, however, highlight the formidable obstacles to achieving monetary union in Europe. The article examines four interpretations of the 1992-3 crisis in the European monetary system, focusing especially on the failure to agree on a co-ordinated realignment that might have avoided the turmoil. It then discusses the future course of monetary union in light of the contending (though not mutually exclusive) interpretations of the crisis. Finally, it discusses the basic outlines of an economic and monetary union that might avoid some of the problems brought into relief by the exchange rate turmoil. [ABSTRACT FROM AUTHOR]