Transcript Economic and Monetary Union and the Euro

Lecturer: Miljen Matijašević
e-mail: [email protected]
Session 4, 31 Mar 2015
1.
Revision of the previous session
2.
Economic and Monetary Union and the Euro
3.
Vocabulary and Practice
Personal Income Tax
1.
2.
3.
4.
What is the advantage of the electronic
services of the Tax Administration?
Name a few forms that can be submitted
electronically!
What is necessary for accessing e-Tax
services?
What is one of the main tasks of the eCroatia programme?
Unit 6
 What



do you remember about the following?
The EEC?
European Council
The Council of the EU
 EMU
– the euro area (a.k.a. the eurozone)
 Established
on 1 January 2002, 10 years after
the Treaty of Maastricht
 Originally included 12 member states
 Replaced national currencies
What effect did the introduction of the single currency have on the
everyday life of EU citizens?
What could have been arguments against the introduction of the
euro?
THE EURO TODAY
 19 EU member states (Austria, Belgium,
Cyprus, Estonia, Finland, France, Germany,
Greece, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, the Netherlands,
Portugal, Slovakia, Slovenia, and Spain)
 6 states yet to join (Bulgaria, the Czech
Republic, Croatia, Hungary, Poland, and
Romania)
 3 states have opted out of the EMU
(Denmark, Sweden, the UK)
Non-member states using the euro:
 The


Vatican, San Marino, Monaco and Andorra
have signed agreements with the EU
use the euro and mint coins
 Kosovo


and Montenegro
no formal agreements
only use the euro
European Central Bank (ECB)
 Set up to determine interest rates and
maintain the value of the euro
 Representatives of EMU states sit on the
board
The Euro Group
 Finance ministers of EMU states
 Meet informally one day before meetings of
EcoFin (the financial configuration of the
Council of the EU)
 The


Werner Report (1970)
Werner – Luxembourg Prime Minister
First suggested that EEC economies and
currencies be brought together
 European


Monetary System – EMS (1979)
Set up to control the variations in the exchange
rates between EEC currencies
Allowed fluctuations between 2.25% and 6%
FURTHER STEPS TOWARDS THE EMU

Single European Act (1986)

Madrid European Council (1989)


Jacques Delors (EC President) put forward a plan and
timetable to set up the EMU
Treaty of Maastricht (1992)


Formally set up the EMU
Laid down the criteria for joining the EMU
REQUIREMENTS IN TERMS OF LIMITS AS REGARDS:

INFLATION


GOVERNMENT DEFICIT


Not more than 60% of the GDP
CURRENCY FLUCTUATIONS


Not more than 3% of the GDP
PUBLIC BORROWING


Inflation may not be more than 1.5% higher than that
of the average of 3 best performing member states
Candidate country must have been part of the EMR II
(Exchange Rate Mechanism) programme for 2 years
LONG-TERM INTEREST RATES

Not more than 2% higher than in MSs with lowest
inflation
 The

Treaty of Maastricht
Protocols to the Treaty left the ‘opt-out’ option
for Denmark, Sweden and the UK
FURTHER STEPS
 Amsterdam European Council (Jun 1997)


Commitment to budgetary discipline
Caution as regards deficit, unemployment
 Luxembourg

European Council (Dec 1997)
Decisions enabling EMU ministers to meet
informally and strengthen monetary policy
 Helped
open up the single market
 Incrased
 Ease
stability – better for investments
of use (cross-border shopping)
 Simplified
transactions and mergers
EMU - Euro Area
single currency
to opt out
Euro Group
euro convergence criteria
(a.k.a. Maastricht criteria)
 Do
the exercises on p.23 in your coursebook