Economic and Monetary Union and the Euro

From the Treaty to application

• The Treaty of Maastricht (1992) enshrined the principle of a single European currency

• On 1 January 2002 the euro started circulating in 12 European countries

The origin

• In 1970 the Werner Report proposed a convergence of economies and currencies of the six EEC countries

• In 1979 the European Monetary System (EMS) was set up

• In 1986 the Single European Act implied the convergence of European economies

Economic and Monetary Union

• In 1989 Commission President Jacques Delors put forward a plan and timetable for bringing about economic and monetary union (EMU)

• The Treaty of Maastricht laid down a set of criteria to be met by member states if they were to qualify for the EMU

Criteria

• Curbing inflation• Cutting interest rates• Reducing budget deficits toa maximum of 3%

of GDP• Limiting public borrowing • Stabilising the currency’s exchange rate

‘Opting out’

• Denmark and the UK reserved the right not to move to the third stage of EMU (adoption of the euro)

European Central Bank

• In order to ensure the stability of the euro, an independent European Central Bank (ECB) was set up, based in Frankfurt, and given the task of setting interest rates to maintain the value of the euro

Economic union

• The euro has replaced currencies that were traditional symbols and instruments of national sovereignty (f. e. German mark)

• It moved Europe considerably closer to economic union

• The need for monetary stability

Stability pact and economic growth

• In Amsterdam, in June 1997 the European Council adopted two important resolutions:

• 1. Stability and growth pact (maintaining budgetary discipline)

• 2. Economic growth (employment as priority)

Coordinating economic policies

• In Luxembourg, in December 1997, the European Council adopted a resolution on coordinating economic policies to establish stronger ties between countries that adopted the euro

Stability of the euro

• In spite of turbulent world situations and crises, the euro has enjoyed that kind of stability and predictability that investors and consumers need

The world’s second most important currency

• The first one is US dollar• The euro is increasingly being used fort

international payments and as a reserve currency

Benefits of a single currency

• The euro has given European citizens a much clearer sense of sharing a common European identity (free movement of people, goods and capital)

Someting about the euro

The name

• The name euro was adopted on December 16, 1995

Euro banknote designs• a design competition winning

design by Robert Kalina theme “Ages and styles of Europe”

• Classical for the €5

• Romanesque for the €10

• Gothic for the €20

• Renaissance for the €50

• Baroque and rococo for the €100

• Iron and glass architecture for the €200

• Modern 20th century architecture for the €500

Euro coin designs

• a design competition winning design by Luc Luycx

• Avers of all euro coins are same, but revers are different for each European Union Member Stete

Italy

• The design of euro coins differs in:– Common side

– Colour

– Edge

– Diameter and thickness

– Mass in grams

Banknote security features

• The “raised” print

• The watermark• The security thread

• The see-through register

• F oil stripe/foil patch

• Iridescent stripe/colour- shifting ink

• Micro lettering

• Ultra-violet properties

• Infra-red properties

The euro today

• Read and discuss the text “The failure of the euro” (handout)

Vocabulary

• Inevitable – neizbježan• Adverse- negativan• To plague – mučiti, ometati, stvarati teškoće• Austerity measures – mjere štednje• To clash – sukobiti se, ne slagati se• Impetus- poriv, pobuda, poticaj• To instill – usaditi, uliti, ulijevati• The Common Market – tržište EU (zajedničko

tržište)

The History of the Euro

• http://www.youtube.com/watch?v=PdLr3lTSyns

• What was contemplated by the League of Nations in 1929?

• What does ECU stand for?• Which countries opted out?• Did the euro help tourism?

Countries that use the euro• The following members of the European Union use the euro:• Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia,

Luxembourg, Malta, The Netherlands, Portugal, Slovenia, Slovakia, Spain

• The following members of the European Union do not use the euro:• Bulgaria, Czech Republic, Denmark, Croatia, Lithuania, Hungary, Poland, Romania, Sweden

and the United Kingdom.

Thank you for your attention!