Transcript Economic and Monetary Union and the Euro

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 notes and coins
started circulating in 12 European countries
•
•
enshrine – sadržavati, ugraditi
notes and coins – novčanice i kovanice
The origins
• 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 to reduce variations in the
exchange rates between the currencies of the
member states
•
•
convergence – konvergencija, usklađivanje
currency - valuta
The Single European Act
• In 1986 the Single European Act implied the
convergence of European economies and the
need to limit fluctuations in the exchange
rates between their currencies
•
exchange rate - devizni tečaj
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
Maastricht Criteria
• Curbing inflation (Inflation may not be more than
1.5% higher than that of the average of 3 best
performing member states)
• Cutting interest rates
• Reducing budget deficits to a maximum of 3% of GDP
• Limiting public borrowing (not more than 60% of the
GDP)
• Stabilising the currency’s exchange rate
•
curb inflation – regulirati inflaciju
‘Opting out’
• Denmark, Sweden and the UK reserved the
right not to move to the third stage of EMU
(adoption of the euro)
•
Opting out - izuzimanje
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 for
international payments and as a reserve
currency, alongside the US dollar
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)
The eurozone
• 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
• Andorra, Monaco, San Marino, and Vatican
City have formal agreements with the EU to
use the euro as their official currency and
issue their own coins
• Kosovo and Montenegro have adopted the
euro unilaterally, but these countries do not
officially form part of the eurozone and do not
have representation in the European Central
Bank (ECB) or in the Eurogroup.
• 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.
The name
• The name euro was adopted on December 16,
1995
Acronyms
• What do they stand for?
•
•
•
•
•
EEC
EMS
EMU
GDP
ECB
Translate into Croatian:
• The Maastricht Treaty laid down a set of criteria to be met by
the member states if they were to qualify for EMU. These
criteria were all about economic and financial discipline:
curbing inflation, cutting interest rates, reducing budget
deficits to a maximum of 3% of GDP, limiting public borrowing
to a maximum of 60% of GDP and stabilising the currency’s
exchange rate. In protocols annexed to the Treaty, Denmark
and the United Kingdom reserved the right not to move to the
third stage of EMU (i.e. adoption of the euro) even if they met
the criteria. This was called ‘opting out’. Following a
referendum, Denmark announced that it did not intend to
adopt the euro. The Swedish people turned down euro
adoption in a 2003 referendum.
About the euro
• •The euro symbol – € – was inspired by the
Greek letter epsilon. It also stands for the first
letter of the word ‘Europe’ in the Latin
alphabet, while the two parallel lines running
through the symbol signify stability. The
European Commission organised an internal
competition to come up with the euro symbol.
Some 30 drafts were considered.
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/colourshifting 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=PdLr3lTSy
ns
• What was contemplated by the League of
Nations in 1929?
• What does ECU stand for?
• Which countries opted out?
• Did the euro help tourism?
Thank you for your attention!