Economic &

monetary union and

the euro
Cuprins

01 02
Why an economic &
monetary union and the Economic and monetary union in
euro? practice

How is the EU working towards

03 boosting growth
 Why an economic &
01 monetary union and
the euro?
A common policy for a common currency
 The Adoption of the Euro

 In the aftermath of WW2

 A way to ensure lasting peace and
reconstruct the E.U. Economy
 Strenghtening cooperation (Free Trade)
 European identity
 Mastricht-The launch of the E.M.U.

A landmark in European integration

 Most important currency after the U.S. $

 In circulation since 2002
 A major achievement of European integration and and
important milestone for countries that were frequiently at war
with each other
Brief history of the euro
Euro in the pockets
Foundations Harmonisation
Euro banknotes and coins
Treaty of Rome European Economic
were introduced as a new single
System(Precursor)
currency in
2002, replacing national currencies

1957 1960/70’s 1979 1992 2002

Long Term Economic & Monetary

ambition Union(E.M.U)
Idea of an E.M.U
Treaty of Mastricht
 Benefits of the economic
and monetary union and the euro?

1 2 3 4 5 6

The EMU Economical Good for

underpins the Price stability Practicality Global Player
Growth Business
Euro Through the pooling of
E.C.B(European a. Eficiency a. Stable interest rates a. Stable currency
a. Monetary economies & markets backed by major
Central bank) b. Helps companies in job
policy(Price brings: economic bloc
a. Stability of b. Transparency and wealth creation
stability/interest a. Benefits of greater size
consumer prices c. End of national
rates) b. Common framework
b. Safeguard the c. Price stability & monetary policy b. 40% of global
b. Economic Policy improving, internal
value(adjusting protection of competition transactions
& Aspects of efficiency,
interest rates) citizen buying
fiscal policy competiteviness & d. Elimination of foreign
c. Maintaining
robusteness. power exchange transaction
inflation rates
just under 2% costs
 What is
theEconomic and
Monetary
Union in practice?
Common principles for stability and growth
 Basic rules of the economic and monetary union?
MONETARY
POLICY
Price stability: setting of
interest rates for the euro
area to maintain inflation
at just under 2 %
Circulation of euro coins
and banknotes
-----------------
The European Central Bank
(ECB) sets interest rates
and prints euro banknotes
National governments
issue euro coins in
quantities approved by the
ECB
ECONOMIC
POLICMAKING
Decisions concerning
education systems,
labour markets,
Pensions
-------
FISCAL POLICY National governments’
Responsibility
Public finances (levels of spending Taxation The EU coordinates and
and (government income)
Makes recommendations in the
borrowing by national governments) ----------
framework of the European semester
National governments’ National governments’ responsibility
responsibility
–––-----
The EU enforces
common rules on
national deficits/debts
Managers...
 The European Commision

 The European Council

 The Euro Summit

 EU Council of
Ministers(“Ecofin Council”)

 Eurogroup

 European Parliament

 National Goverments

 European Central Bank

How did the economic and financial
crisis occur? Sovereign debt
crisis

2013-14
2010-12
Debts and
2007-08
economic
divergences Economic crisis Recovering from
the crisis
A global financial
crisis
2000
2009
 How is the EU
03 working to boost
growth?
Emerging stronger together from the crisis
Exiting the crisis, 1. THE ‘EUROPEAN

restoring growth: SEMESTER’: A NEW

APPROACH TO ECONOMIC
COOPERATION

2. A COMPREHENSIVE
STRATEGY TO ENSURE
FINANCIAL STABILITY

3. ANTICIPATING AND
CORRECTING MAJOR
ECONOMIC IMBALANCES

4. STRICTER SUPERVISION OF
BANKS: PROTECTING THE
TAXPAYER
 A banking union, including strict
oversight of financial markets and
banks (already in place) and common
rules and funds for dealing with banks
in difficulty, to ensure banks behave
responsibly and to protect the
taxpayer;
Deeper economic union to underpin the monetary
union, with targeted investments to boost growth

The way forward... and competitiveness, as well as a stronger social

dimension;

Towards a deeper and fairer A fiscal union to ensure sound public

economic and monetary union. finances and to deepen financial
solidarity between countries in times of
crisis.

Next steps:
 Short-term: ensure financial stability, the
Commission will build on a review of the ‘two-pack’ and
‘six-pack’ legislation, designed to avoid excessive
deficits and debts in EU countries, whilst making
proposals for strengthening the social dimension of
economic and monetary union.

Next steps...
In the medium term: the Commission will improve the way in
which conditional financial support is granted to euro area
countries in difficulty by reinforcing the democratic legitimacy
of its intervention structures and by better taking into account
the social impact of economic reforms required in those
countries.