Who Will Join Emu

Analyzes the roots of Europe's economic decline, examining institutions of the European Union and exploring possibilities for reform.

Two issues are discussed. The first is which countries might benefit from entry into EMU before the millennium. Germany and her immediate neighbors appear the most likely to gain; however, our knowledge is too uncertain to say whether all, some, or no countries would reap net economic benefits. The second issue is how to avoid exchange rate instability in the transition to EMU. Experience from earlier exchange rate regimes suggests that an early announcement the parities at which different currencies would enter EMU could reduce such instability if governments were willing to accept the required limitations on domestic policies.

Seminar paper from the year 2001 in the subject Business economics - Miscellaneous, grade: 1.7 (A-), Oxford Brookes University (School of Business), course: Business Environment UK, language: English, abstract: Background of EMU and current situation of the UK Since 1952 when the European Coal and Steel Community was founded the face of Europe has changed a lot. Barriers have been removed to enable goods, services, investment and people to move freely within the Community and politicians worked hard to get closer to the ideal of a political and economical united Europe. In two months the next major step will be taken by 12 nations of the European Union: The EURO will replace the old currencies. But Britain, although a member of the European Union, will not participate in Euro-zone in the foreseeable future. In 1991 the Maastricht Treaty (Treaty on European Union) was signed in order to extend the Treaty of Rome (1957). One part of this Treaty was the formation of an economic and monetary union (EMU). Therefore the European Central Bank (ECB) was established and a new currency - the ECU, today called Euro. The ECB shall replace the national central banks and its "primary objective is to maintain a low and stable rate of price inflation for the euro currency." 1) Although Britain had joined the exchange rate system (ERS), the so called "parity grid" of the European Monetary System (EMS) in 1990 and had also signed the Maastricht Treaty it was forced to leave the EMS on Wednesday, 16 September 1992, known as "Black Wednesday". Sterling had dropped below the "floor" of the grid and all measures to support the currency failed. The UK gained opt-outs from stage 3 of EMU during the Maastricht conference, which means: "UK shall notify the council whether it intends to move to the third stage, and that unless it does, it will be under no obligation to do so." 2) Now, as the EMU comes closer the subject presses hard on the Blair-government but a date for the planned referendum, which shall bring a decision, is still not stated. [...]

Essay from the year 2006 in the subject Economics - Monetary theory and policy, grade: 1,4, Dublin City University (Business School), course: Course EU Politics, language: English, abstract: The creation of the European and Monetary Union (EMU) has been one of the most determined and successful projects carried out by the European Union (EU) – and it is still in progress since eleven EU-countries are, following the Maastricht treaty, legally required to join the Eurozone as soon as they meet the convergence criteria. The reasons for the creation of EMU have been widely discussed among scholars; some focus on the request for political integration that would resulted from an EMU, some claim that the EMU was established to promote growth and investment. The assignment will hence “discuss how the creation of EMU was both an economic and politically driven process”. Chapter 1 outlines events and agreements which indirectly led to the EMU. Chapter 2 assesses the Delors Report and the Stability and Growth Pact (SGP) which affect EMU directly . Chapter 3 concludes by analysing the mentioned 30-year process leading to the EMU and gives a brief outlook. This approach has been chosen because it is essential to study the historical events leading to the Delors Report and finally the Treaty on European Union (TEU) in order to analyse the creation of EMU.

Essay from the year 2005 in the subject Business economics - Economic Policy, grade: 1,2, Arnhem Business School (Arnhem Business School), course: International Economics, language: English, abstract: Since the beginning of the idea of the European Monetary Union (EMU), UK had a negative attitude towards a single monetary policy with a single currency. This antipathy was amplified on the one hand by the withdrawal of the European Exchange Rate Mechanism in 1992 caused by different economic policies, oil price rises and German unification and on the other hand by the launch of the EMU in 1999. In fact the UK government starts to work towards cooperation with the EMU by setting specific goals. But before taking further steps, the criteria of the Maastricht Treaty have to be fulfilled and the five economic tests assessed by the UK government have to be passed. Since 1997 the UK has made real progress towards meeting the five economic tests. Although there are arguments that in a long term the payback of joining EMU offset the costs, the benefits are too low and the costs too high at the moment. The idea of one currency in Europe has been around for many years. But according to Pitchford the true launching of the EMU process dates from the Werner Committee which was set up in 1970 and submitted its final report, called 'the Werner Report', in February 1971. The first major step for the implementation of the Werner plan was the European 'currency snake' in 1972. Through this arrangement the fluctuations between participants' exchange rates should be limited to ± 2.25%. However, this process was not effective because of the collapse of the Bretton-Woods regime which determined a fixed exchange rate in terms of gold. The UK joined the snake system just for one month. A further step was the creation of the European Monetary System (EMS) in 1979. The main objective of this system was to create monetary stability in Europe. This should be realized by the fixed rates between the currencies of the participating countries which where settled on their value against the European Currency Unit (ECU4). The UK did not join in the EMS and was still remote at the time of Delors Report in 1989.

The Maastricht Treaty, signed in December 1991, set a timetable for the European Community's economic and monetary union (EMU) and clearly defined the institutional policy changes necessary for its achievement. Subsequent developments have demonstrated, however, the importance of many key issues in the transition to EMU that were largely neglected at the time. This volume reports the proceedings of a joint CEPR conference with the Banco de Portugal, held in January 1992. In these papers, leading international experts address the instability of the transition to EMU, the long-run implications of monetary union and the single market for growth and convergence in Europe. They also consider the prospects for inflation and fiscal convergence, regional policy and the integration of financial markets and fiscal systems. Attention focuses on adjustment mechanisms with differentiated shocks, region-specific business cycles and excessive industrial concentration and the cases for a two-speed EMU and fiscal federalism.

Presenting a sweeping analysis of the legal foundations, institutions, and substantive legal issues in EU monetary integration, The EU Law of Economic and Monetary Union serves as an authoritative reference on the legal framework of European economic and monetary union. The book opens by setting out the broader contexts for the European project - historical, economic, political, and regarding the international framework. It goes on to examine the constitutional architecture of EMU; the main institutions and their legal powers; the core legal provisions of monetary and economic union; and the relationship of EMU with EU financial market and banking regulation. The concluding section analyses the current EMU crisis and the main avenues of future reform.

Seminar paper from the year 2001 in the subject Business economics - Economic Policy, grade: 2.0 (B), Oxford Brookes University (School of Business), course: Module 7544, 16 entries in the bibliography, language: English, abstract: On January 1st 1999 the Euro ( ) became the official currency in the participating countries inside the European Union. France, Germany, Spain, Portugal, the Netherlands, Belgium, Luxembourg, Austria, Italia, Ireland, Finland and Greece introduced this currency as the new single currency, while the national currency is still valid and in use, as the Euro is not yet available in coins and notes. Though the exchange rates between the currencies were irrevocably fixed. In less than two months, on January 1st 2002, the Euro will be introduced, and from that day on the Euro notes and coins are in use. Despite of many advantages, that′ll be explained later in this coursework, a few countries of the EU did not join the European Economic and Monetary Union (EMU) and have not introduced the Euro. Sweden, Denmark and Great Britain refused to take part in the EMU and preferred to sustain their own currencies. This coursework faces the question whether the UK should join the EMU. I will analyse the advantages and the disadvantages of the EMU for UK′s economic and business environment.