Presentation on Birth of Euro, and Its impact on Global reserves. Also has analysis on Is it posible for Euro to replace Dollar as Global Currency. Presentad By Students of FMG 18 A ( Aakriti kakkar, Aditi Bindlish, Ankit Gupta, Madhusudan Partani and Pragati Saraf of FORE School of Management, New Delhi)

1. BIRTH OF EURO AND ITS IMPACT ON INTERNATIONAL TRADE

2. Albania Austria Belarus Belgium Bos.& Herz. Bulgaria Croatia Cyprus CzechRep. Denmark Estonia Finland France Germany Greece Hungary Iceland Italy Latvia Lithuania Luxembourg Mac. Malta-> Moldova Mont. Netherlands Norway Poland Portugal Romania Russia Serbia Evolution of the European Union European Steel and Coal community Rome Treaty creating EEC Maastricht Treaty creating EU

3. Formation of the EU

4. TREATIES TIMELINE

5. Formation of the EMU

6. CRITERIA TO JOIN EMU

7. STABILITY GROWTH PACT

8. BIRTH OF EURO 3 stages of EMU Currency of EMU

9. WHY WAS THE EURO INTRODUCED?

10. Administration The Euro is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Eurosystem (composed of the central banks of the eurozone countries).

11. COINS The euro is divided into 100 cents (sometimes referred to as euro-cents, especially when distinguishing them from other currencies). €2, €1, 50c, 20c, 10c, 5c, 2c, and 1c denominations

12. BANK NOTES

14. DIRECT AND INDIRECT USAGE DIRECT USAGE 16 Member States of the European Union use the euro as their currency Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, The Netherlands, Austria, Portugal, Slovenia, Slovakia, Finland Non-participants Bulgaria, Czech Republic, Denmark, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Sweden and the United Kingdom

15. DIRECT AND INDIRECT USAGE INDIRECT USAGE

16. THE EURO IN GLOBAL MARKETS International Trade Derivatives Market OTC Interest rate Derivatives Debt Securities Market Foreign Exchange Reserve Disclosed Currency Composition Stability of Exchange rates

17. Share in International Debt Market Narrow and Global Measure Narrow: Only Offshore Global: Both Domestic as well as Offshore Constant as well as Current rate

20. Observation Share of the euro remained relatively stable From 27% in 1999 to 30% in 2009 ( Global Measure)

21. Share in Global Foreign Exchange Reserves IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) database (COFER is an IMF database that keeps end-of-period quarterly data on the currency composition of official foreign exchange reserves) Reserve buffers may have been useful in many vulnerable emerging market countries during the crisis.

25. Analysis Share of Undisclosed reserves, which include Currencies of China, Australia, India etc… Drastic fall in reserves of US$, but the undisclosed reserves can be in form of US$ Also due to depreciation of US$ Also the rise in EURO could be because of Depreciation of US$.

26. Share in International Derivatives

27. Source: BIS Quarterly Review: 'June 2010

29. Exchange Rates Source: Oanda.com

30. Source: Oanda.com

31. Analysis 1999-2002: Depreciation in Euro higher growth rate of money in the EU higher rate of capital accumulation higher interest rates in the US Post 2002: Appreciation in Euro coins were finally withdrawn from use Euro as medium of exchange, Store of value

32. International Use of Euro

34. Factors that suits a currency for international currency status

36. Continued…

39. PRESENTED BY: AaakritiKakkar (91001) AditiBindlish (91003) Ankit Gupta (91006) MadhusudanPartani (91029) Pragati Saraf (91040)