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Euro Performance


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Performance of the euro, problems, solutions, and the future.

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Euro Performance

  1. 1. The Euro:<br />Past, Present, and Future<br />
  2. 2. Outline<br />Introduction<br />History<br />Performance<br />Challenges<br />Progress<br />Future<br />
  3. 3. Introduction<br />1st January 1999 the Euro Currency was born <br />The Euro-system assumes responsibility of the region’s monetary system <br />EU hoped to create economic stability and opportunities in the European market <br />Give Europe a concrete identity in the international monetary scene<br />
  4. 4. Member States<br /><ul><li>Austria
  5. 5. Portugal
  6. 6. Finland
  7. 7. Greece
  8. 8. Slovenia
  9. 9. Cyprus
  10. 10. Malta
  11. 11. Slovakia</li></ul>Belgium<br />Germany<br />Ireland<br />Spain<br />France<br />Italy, <br />Luxembourg, <br />The Netherlands <br />
  12. 12. Pending members<br />Sweden<br />Bulgaria<br />Poland<br />Hungary<br /> The Czech Republic<br />Denmark and Great Britain not interested at this point <br />
  13. 13. A Single Currency<br />Eliminates exchange risk<br />Eliminates cost of exchange<br />Increases price stability and transparency<br />Stimulates economic growth <br />
  14. 14. History<br />12 members of the to-be European Union met in the Maastricht, Netherlands and discussed the creation of the European Union. <br />The Maastricht Treaty created the European Union as we know it today and led to the creation of the euro <br />These states agreed to set up a single currency as part of a drive towards the European Economic and Monetary Union.<br />
  15. 15. History<br />European Coal and Steel Community (ECSC) on the 18th of April 1951<br />The treaties of rome were signed on the 25th of March 1957<br />European Atomic Energy Community (AEC)<br />European Economic Community (EEC)<br />Common Agricultural Policy (CAP)<br />1968 customs union<br />1968 a customs union<br />
  16. 16. The "British problem<br />Great Britain refused to be a part of the EEC<br />UK Formed the European Free Trade Association (EFTA)<br />1961 the UK tried to join the EEC (after little success with EFTA)<br />Blocked by the then French Prime Minister twice (1961 and 1967)<br />UK Finally joined in 1973<br />
  17. 17. The Maastricht Treaty<br />Signed on the 7th of February in 1992<br />Formation of the European Union<br />European Citizenship over national citizen<br />
  18. 18. The euro was initially introduced only in electronic form. <br />cash and coin came in January 2002 <br />Currencies like the German Mark, French Franc, Italian Lira etc. were no longer in existence by July 2002 <br />European Central Bank (ECB) began to form policies for the countries that were using the euro <br />
  19. 19. 20 years of the EURO 1979-2002<br />
  20. 20. Performance<br />Improved economic growth across Europe’s financial markets<br />All the countries under the euro system must have the same interest rates<br />Governments cannot manipulate interest rates to stimulate economies<br />Economies have not been performing the same way<br />
  21. 21. Currency Performance<br />
  22. 22. Euro Timeline 2001-2011<br />
  23. 23. Economic Indicators<br />Exports<br />GDP<br />Inflation<br />
  24. 24. Exports<br />Exports increased<br />The number of products exported increased<br />The number of exporters increased<br />
  25. 25. Shift in the supply curve<br />
  26. 26. GDP<br />
  27. 27. GDP<br />
  28. 28. GDP<br />
  29. 29. Inflation<br />
  30. 30. Inflation<br />
  31. 31. Inflation<br />
  32. 32. Current Problems<br />The appreciation of the euro<br />Debt<br />Greece, Ireland, Portugal, and Spain<br />
  33. 33. Debt Criterion<br />A country’s deficit is not to exceed 3% of GDP<br />A country’s debt is not to exceed 60% of GDP<br />
  34. 34. Challenges<br />Restructuring of debt<br />Disparities in the economic performance of Member States<br />Asymmetric Shocks<br />
  35. 35. Asymmetric Shock<br />
  36. 36. Progress<br />Austerity measures<br />Decrease in government spending<br />Tax increases<br />Retirement age increased<br />
  37. 37. Government Regulation<br />Tighter capital requirements<br />Basel III requirements<br />Securitization vehicles<br />Credit rating agencies<br />New derivatives regulations<br />Financial watchdogs<br />Tougher on tax evasion<br />
  38. 38. EU Bailout<br />$955 billion to assist sovereign debt crisis<br />59% from loans from euro zone governments<br />33% from the IMF<br />8% from an EU emergency fund<br />
  39. 39. Future of the Euro<br />The currency<br />EUR/USD Futures<br /> June 2011 – 1.4523<br /> Sept 2011 – 1.4482<br /> Dec 2011 – 1.4420<br /> March 2012 – 143.86<br />
  40. 40. Future of the Euro<br />Opinions vary<br />Efforts of the ECB and EU will prevail<br />Member States forced out<br />Euro zone split into separate currency areas<br />Euro extinction<br />