The euro
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The document discusses the origins and history of the euro currency. It began with efforts after World War 2 to integrate European economies through organizations like the European Coal and Steel Community. This eventually led to the Maastricht Treaty in 1993 which paved the way for monetary union. In 1999, 11 countries adopted the euro as their currency, replacing their individual currencies by 2002. Since then, several other EU members have adopted the euro as challenges from the debt crisis unfolded.
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The euro
- 1. B U S 6 3 5 I O A N N I S M I K E D I S THE EURO
- 2. AGENDA • Europe and War • The origins of the European Union • The origins of the Euro • Euro recent highlights • Adoption of the Euro
- 3. EUROPE AND WAR • Number of Conflicts : 542 • Longest Conflict: 770 yrs • First Conflict on Record: 1112 BC • Last major Conflict on Record: 2008
- 4. EUROPE AND WAR – BASED ON DURATION (YRS) 281 43 32 26 12 20 10 9 6 6 0 50 100 150 200 250 300 1 2 3 4 5 6 7 8 9 10
- 5. THE ORIGINS OF THE EURO • 1950 — French Foreign Minister Robert Schuman proposes integrating the coal and steel industries of Western Europe. • 1951 — The European Coal and Steel Community (ECSC) is established, with six members: Belgium, West Germany, Luxembourg, France, Italy and the Netherlands. A supranational body, called the High Authority, is created to manage the coal and steel industries. • 1957 — The six members of the ECSC sign the Treaties of Rome, creating the European Economic Community (EEC) and the European Atomic Energy Community. The EEC member states aim to remove trade barriers between them and form a common market. • 1967 — The institutions of the three European communities are merged, creating a single commission, a single council of ministers and a European parliament. • 1979 — The first direct elections for the European parliament are held, allowing citizens to vote for candidates. • 1993 — The Treaty of Maastricht creates the European Union, paving the way for monetary union. • 2002 — A single currency, the euro, replaces national currencies in 12 of the 15 countries of the EU.
- 6. EURO RECENT HIGHLIGHTS • 2004 — In its largest expansion, the EU welcomes 10 new countries, and a new constitution is signed. • 2005 — The move to ratify the constitution suffers setbacks when France and the Netherlands reject the document. • 2007 — Bulgaria and Romania join the EU, expanding the union to 27 member states. • 2008 — The value of the euro reaches an all-time high on July 18 at 1.5843 to the dollar. But the worldwide recession begins to take its toll on the currency and European economies later in the year. • 2009 — In December, the world's three main credit ratings agencies downgrade Greece's debt, sending financial markets tumbling and raising concerns about other weak European economies like Portugal, Spain, Ireland and Italy. • 2010 — As the EU struggles to contain the debt crisis, Standard & Poor's in April downgrades Greece's sovereign debt to junk status, and cuts Portugal and Spain's credit ratings. Eurozone finance ministers meet in May to approve a 110-billion-euro loan package to Greece. In June, the euro reaches a four-year low, falling below $1.19.
- 7. ADOPTION OF THE EURO 1999 Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland 2001 Greece 2002 Introduction of euro banknotes and coins 2007 Slovenia 2008 Cyprus, Malta 2009 Slovakia 2011 Estonia
- 8. EURO MEMBERS • 1) Andorra 2) Austria* 3) Belgium* 4) Cyprus* 5) Estonia* 6) Finland* 7) France* 8) Germany* 9) Greece* 10) Ireland* 11) Italy* 12) Kosovo 13) Luxembourg* 14) Malta* 15) Monaco 16) Montenegro 17) Netherlands* 18) Portugal* 19) San Marino 20) Slovakia* 21) Slovenia* 22) Spain* 23) Vatican City * Members of EU
- 9. MEMBERS OF EU • Austria • Belgium • Bulgaria • Croatia • Cyprus • Czech Republic • Denmark • Estonia • Finland • France • Germany • Greece • Hungary • Ireland • Italy • Latvia • Lithuania • Luxembourg • Malta • Netherlands • Poland • Portugal • Romania • Slovakia • Slovenia • Spain • Sweden • United Kingdom
- 10. THE EEC IN 1957
- 11. EEC 2013
- 12. FUTURE EXPANSION – 28 COUNTRIES, 500 MILLION PEOPLE
- 13. EURO - PROS • Makes travel easier • Stable currency with low inflation • Low interest rates • Single currency price transparency • Easier international trade • Protection from external economic shocks
- 14. EURO - CONS • Differences among Euro Countries economic performance • Political barriers • Loss of national sovereignty • Cost of introduction • Unemployment increase • Easy of acceptability is questionable
- 15. ARE THEY BETTER OFF?
- 16. ARE THEY BETTER OFF?
- 17. ARE THEY BETTER OFF?
- 18. CONCLUSIONS • The European experiment is still underway • The rapid increase in membership makes evaluations difficult • The common currency has both pros and cons • On individual country basis responsible fiscal policy is proving to be far more challenging
Editor's Notes
- Advantages: A single currency should end currency instability in the participating countries (by irrevocably fixing exchange rates) and reduce it outside them. Because the Euro would have the enhanced credibility of being used in a large currency zone, it would be more stable against speculation than individual currencies are now. 2. Consumers would not have to change money when travelling and would encounter less red tape when transferring large sums of money across borders. It was estimated that a traveler visiting all twelve member states of the (then) EC would lose 40% of the value of his money in transaction charges alone. 3. Businesses would no longer have to pay hedging costs in order to insure themselves against the threat of currency fluctuations. Businesses, involved in commercial transactions in different member states, no longer have to face administrative costs of accounting for the changes of currencies, plus the time involved. It is estimated that the currency cost of exports to small companies is 10 times the cost to the multi-nationals, who offset sales against purchases and can command the best rates. 4. A single currency results in lower interest rates. This should lead to more investment, more jobs and lower mortgages. Disadvantages: Fifteen separate countries with widely differing economic performances and different languages have never before attempted to form a monetary union. It works in the United States because the labor market is mobile, helped by the common language and portability of pensions etc. across a large geographical area. Language in Europe is a huge barrier to labor force mobility. This may lead to pockets of deeply depressed areas in which people cannot find work and areas where the economy flourishes and wages increase. While the cohesion funds attempt to address this, there are still great differences across the EU in economic performance. 2. If governments were obliged through a stability pact to keep to the Maastricht criteria for perpetuity, no matter what their individual economic circumstances dictate, some countries may find that they are unable to combat recession by loosening their fiscal stance. They would be unable to devalue to boost exports, to borrow more to boost job creation or cut taxes when they see fit because of the public deficit criterion. 3. All the EU countries have different cycles or are at different stages in their cycles. One central bank cannot set inflation at the appropriate level for each member state. 4. Loss of national sovereignty is the most often mentioned disadvantage of monetary union. The transfer of money and fiscal competencies from national to community level, would mean economically strong and stable countries would have to co-operate in the field of economic policy with other, weaker, countries, which are more tolerant to higher inflation. 5. The one off cost of introducing the single currency will be significant. Such changes include educating customers, changing labels, training staff, changing computer software and adjusting tills.