Economic and Monetary Union

&Euro currency

Economic and Monetary Union(EMU)

- The Economic and Monetary Union (EMU) is a term for the group of policies aimed at converging the economies of all member states of the European Union at three stages.- It involves the coordination of economic and fiscal policies, a common monetary policy, and a common currency, the euro.- Whilst (iken) all 28 EU Member States take part in the economic union, some countries have taken integration further and adopted the euro. Together, these countries make up the euro area.

- The decision to form an Economic and Monetary Union was taken by the European Council in the Dutch city of Maastricht in December 1991, and was later enshrined in the Treaty on European Union (the Maastricht Treaty).

Aims;• Coordination of economic policy-making between

Member States• Coordination of financial policies, notably (especially)

through limits on government debt and deficit• An independent monetary policy run by the European

Central Bank (ECB)• The single currency and the euro area

Within EMU there is no single institution responsible for economic policy. Instead, the responsibility is divided between Member States and the EU institutions. The main actors in EMU are:

• The European Council – sets the main policy orientations • The 'Eurogroup' – coordinates policies of common interest for the

euro-area Member States • The Member States – set their national budgets within agreed

limits for deficit and debt, and determine their own structural policies involving labour, pensions and capital markets

• The European Commission – monitors performance and compliance

• The European Central Bank (ECB) – sets monetary policy, with price stability as the primary objective

• The European Parliament - shares the job of formulating legislation with the Council, and subjects economic governance to democratic scrutiny in particular through the new Economic Dialogue

Euro

What is euro?• Europe’s single currency • shared by 16 EU countries and

around 329 million citizens• world’s most important

currency • the euro was launched on 1

January 1999• Before a Member State can

adopt the euro, it must fulfil certain economic and legal criteria.

Which countries have adopted the euro and

when? • 1999 - Belgium, Germany,

Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland

• 2001 - Greece• 2007 - Slovenia• 2008 - Cyprus, Malta• 2009 - Slovakia

• Coins:1c · 2c · 5c · 10c · 20c · 50c · €1 · €2 · €2

• Banknotes:€5 · €10 · €20 · €50 · €100 · €200 · €500

Advantages • Makes travelling easier• A stable currency with low

inflation • Low interest rates• A single currency increases

price transparency• Easier international trade • Better protection from

external economic shocks

The EndThank you!