1. A problem
   

 It is commonly agreed that monetary union membership should lead to harmonization of prices in member states. Additionally it also may increase a volume of trade. The question arises whether monetary union may also lead to harmonization of compensations awarded by courts in member states. According to R. Coase (1960) commodities should be defined as bunches of rights transferred between parties. These transfers may be either voluntary or involuntary. Involuntary exchanges of rights for a given sum of money take the form of compensations awarded by courts. This model has been extended by Calabresi/Melamed (1972) and more recently by Ayres (2005) who elaborated the concept of optional judicial remedies ie. liability rules vs. property rules. Whereas property rules promote voluntary exchanges, liability rules enable involuntary transfers in case of high transaction costs. Those involuntary transfers play an important role in case of takings and expropriations by member states as well as in wider area of tort liability. Empirical surveys show that the average compensation in EU varies highly from state to state. The question arises, whether and under which conditions harmonization of prices resulting from EMU may also affect the amount of compensations awarded by courts in case of state liability for damages.

2. Methodological approach

 Economic analysis of state liability for damages should be based on the assumption that the judicial activity of domestic courts may in some instances result with damage. According to this, adjudication should be treated in an analogous way to production activity (Landes, Posner).
Therefore, there are three areas of the application of economic analysis of law to this problem:
The first- modelling the judicial strategy depending on probability of correct judgment (epistemic one).
The second- modelling costs of application of EC law under CILFIT standard for two standards of liability: strict liability and negligence. Those costs include costs of adjudicating on EC law and costs of potential judicial errors: loss suffered by individuals deprived of adequate and effective protection of their rights established by EC law.
The third- modelling the average amount of compensation in case of infringement of  rights, whose value is to be standardized in a long run market equilibrium under the assumption of harmonisation of prices resulting from EMU.

2. Expected results
   

 The paper will concentrate on the possibility of indirect harmonization of compensations due to monetary integration and optimization of state liability for damages in EU law.  The aim of the paper is to scrutinize the link between judicial discretion, the standard of liability and the monetary integration. This triangular relation is to be analyzed in order to optimize legal conditions for harmonization of compensations in member states under the assumption of application of EC law in member states (procedural condition)  and harmonization of prices of entitlements due to monetary integration (substantial condition). Those findings may lead to the conclusion according to which monetary integration could under some conditions strengthen the rule of law in the EU.
JEL Classification K10, E42
Keywords: monetary integration, rule of law, property rules, liability rules