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Euro
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Co-finanziato
Dal Programma LLP dell’Unione Europea
The introduction of euro in Italy has caused different
reactions. There are two current public opinions on euro: the
first one claims that euro is the cause of all Italian economic
problems, the second one that EU political system relies on
euro. We are looking for a scientific assessment of euro. First
of all we have to ask: what is euro? How does economy
work? Which are the concordats that lead the EU economic
system? The first step is looking more closely to the Italian
economic history. We will deal with these questions with an
historical approach.
L’autore è il solo responsabile di questa comunicazione. L’Unione europea declina ogni responsabilità sull’uso che potrà essere fatto delle informazioni in essa contenute.
Key notions
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The public debt – the public debt is a value that countries must pay for those who have
previously created it.
Why was euro created? Euro is an instrument of politics created at the the begining of the
20th century to manage the globalization that involved all European countries.
Inflation - inflation is a sustained increase in the general price level of goods and services
in an economy over a period of time. When the general price level rises, each unit of
currency buys fewer goods and services. Consequently, inflation reflects a reduction in the
purchasing power per unit of money.
Key notions
• What is the European system of central banks? The European system of central
banks is composed of the European Central Bank (ECB) and the national central
banks (NCBs) of all 28 European Union (EU) Member States. In accordance with
the treaty establishing the European Community and the Statute of the European
System of Central Banks and of the European Central Bank, the primary objective of
the Eurosystem is to maintain price stability. Without prejudice to this objective, the
Eurosystem shall support the general economic policies in the Community and act in
accordance with the principles of an open market economy.
• Maastricht Treaty - The treaty led to the creation of euro. One of the obligations of
the treaty for the members was to keep "sound fiscal policies, with debt limited to
60% of GDP (Gross Domestic Production) and annual deficits no greater than 3% of
GDP."The treaty also created what was commonly referred to as the pillar structure
of the European Union, the European Community pillar, the Common Foreign and
Security Policy and the Justice and Home Affairs.
The Italian crisis and the
euro
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The data show us that Italy is the
only country whose Gross Domestic
Product decreased after the country
joined the single European currency.
This fact shows that the Italian
problem isn't the result of the
introduction of euro and we can
reach this conclusion by analising
the Italian economic system in the
past. When Italy entered EU it was
in a bad condition: the public debt
was high and a not very strong
industry could not work within a
global economy.
Italian Economy
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The data show us the productivity of
Germany (blue) and the productivity of
Italy (red) and the pay of German and
Italian workers. This graphic shows us
the gap beetween how much a worker
produces and how much he is paid in
Italy. The causes are mainly the strong
role played by trade unions in Italy that
makes salaries static. In a shallow vision
it is good but we have to take it into
account if we have the possbiility to do
that. It is a start for the inflation.
The 2009's Crisis
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China entered global commerce around 2009 and it soon started to change
the world economic environment. China was an emergent country and many
products costed less because labor force was cheaper and there were no trade
unions to defend human rights. The process of crisis started when China big
factories owners became rich and decided to invest their money and protect it.
They invested in euros and dollars that are a safer currency. Banks became
richer and started to advise people to invest in packages of values and they also
started to give loan to buy houses, often to people who could not pay back. The
situation made the people give their houses backs. Banks tried to sell them but
the low purchasing power of the people stopped house trade. The values of
houses went down because of a high supply and a low demand. All these
investiments resulted in a total failure. In this global economic environment the
European Central Bank played a main role helping banks by giving them
money to avoid bankruptcy.
The 2009's Crisis
These data show us the effects
of China on prices and
productivity
• We thank Dott Tommaso Sonno for his support and guide
• Bibliography : «L’Italia alla Sfida dell’Euro» di
Altomonte Carlo, Sonno Tommaso
Acknowledgments and
Bibliography