Monetary union: Difference between revisions
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The [[Monetary Union|monetary union]] is one of the most developed stages of the economic integration [[process]] and theoretically the [[Monetary Union|monetary union]] should include a common [[market]], co-ordination of monetary and economic policies, common authority which acts like a central bank and a common [[money]]. | The [[Monetary Union|monetary union]] is one of the most developed stages of the economic integration [[process]] and theoretically the [[Monetary Union|monetary union]] should include a common [[market]], co-ordination of monetary and economic policies, common authority which acts like a central bank and a common [[money]]. | ||
== The Economic and Monetary Union == | ==The Economic and Monetary Union== | ||
The Economic and [[Monetary Union]] (EMU) established in 1992 as a result of Maastricht Treaty is the best known example of [[Monetary Union|monetary union]]. Basis of the EMU was set up by the constitution of the committee represented by the European Commission, Jacques Delors. The results of the committee were presented as the Delors Report in 1989. | The Economic and [[Monetary Union]] (EMU) established in 1992 as a result of Maastricht Treaty is the best known example of [[Monetary Union|monetary union]]. Basis of the EMU was set up by the constitution of the committee represented by the European Commission, Jacques Delors. The results of the committee were presented as the Delors Report in 1989. | ||
In case of EMU there is a common market between all EU member states and the co-ordination of their economic policies through national convergence programmes and multilateral surveillance. Moreover, the European Central Bank (ECB), the main monetary authority of the EMU, co-ordinates monetary policies of all EU members which introduced the single currency after January 1999. The ECB with national central banks create the European [[System]] of Central Banks (ESCB) which is fully responsible for setting one common monetary policy. | In case of EMU there is a common market between all EU member states and the co-ordination of their economic policies through national convergence programmes and multilateral surveillance. Moreover, the European Central Bank (ECB), the main monetary authority of the EMU, co-ordinates monetary policies of all EU members which introduced the single currency after January 1999. The ECB with national central banks create the European [[System]] of Central Banks (ESCB) which is fully responsible for setting one common monetary policy. | ||
== Participants of EMU == | ==Participants of EMU== | ||
Although all EU member countries are participants of EMU, only 16 of them have introduced the euro so far i.e.: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, The Netherlands, Portugal, Slovakia, Slovenia, Spain. | Although all EU member countries are participants of EMU, only 16 of them have introduced the euro so far i.e.: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, The Netherlands, Portugal, Slovakia, Slovenia, Spain. | ||
== Convergence criteria == | ==Convergence criteria== | ||
The Maastricht Treaty envisaged so called 'convergence' criteria to be satisfied before the member states could participate in the euro: | The Maastricht Treaty envisaged so called 'convergence' criteria to be satisfied before the member states could participate in the euro: | ||
# the inflation rate no more than 1,5% above the average of the 3 countries having the lowest inflation rate in the EU | # the [[inflation]] rate no more than 1,5% above the average of the 3 countries having the lowest inflation rate in the EU | ||
# the public debt of the country has to be less than 60% of GDP | # the public debt of the country has to be less than 60% of GDP | ||
# the national budget deficit has to be less than 3% of GDP | # the national budget deficit has to be less than 3% of GDP | ||
# the long-term interests should be no more than 2% above the average of the 3 countries with the lowest inflation rates | # the long-term interests should be no more than 2% above the average of the 3 countries with the lowest inflation rates | ||
# the exchange rates of the country should be within the normal band (+/- 2,25%) of the Exchange Rate Mechanism (ERM) without tension and devaluation for 2 years before the assessment. | # the exchange rates of the country should be within the normal band (+/- 2,25%) of the Exchange Rate Mechanism (ERM) without tension and [[devaluation]] for 2 years before the assessment. | ||
'''See also:''' | '''See also:''' | ||
* [[Emission of money]] | * [[Emission of money]] | ||
{{infobox5|list1={{i5link|a=[[International Monetary Fund]]}} — {{i5link|a=[[Washington consensus]]}} — {{i5link|a=[[Group of eight]]}} — {{i5link|a=[[Bank for International Settlements]]}} — {{i5link|a=[[European monetary system]]}} — {{i5link|a=[[Global bank]]}} — {{i5link|a=[[Equalization payment]]}} — {{i5link|a=[[Schengen Area]]}} — {{i5link|a=[[European regional development fund]]}} }} | |||
==References== | ==References== | ||
* Von Hagen, J., & Eichengreen, B. (1996). ''[http://www.jstor.org/stable/2118110 Federalism, fiscal restraints, and European monetary union]''. The American Economic Review, 86(2), 134-138. | * Von Hagen, J., & Eichengreen, B. (1996). ''[http://www.jstor.org/stable/2118110 Federalism, fiscal restraints, and European monetary union]''. The American Economic Review, 86(2), 134-138. | ||
{{a|Przemysław Żur}} | {{a|Przemysław Żur}} | ||
[[Category:Macroeconomics]] | [[Category:Macroeconomics]] | ||
Latest revision as of 01:57, 18 November 2023
The monetary union is one of the most developed stages of the economic integration process and theoretically the monetary union should include a common market, co-ordination of monetary and economic policies, common authority which acts like a central bank and a common money.
The Economic and Monetary Union
The Economic and Monetary Union (EMU) established in 1992 as a result of Maastricht Treaty is the best known example of monetary union. Basis of the EMU was set up by the constitution of the committee represented by the European Commission, Jacques Delors. The results of the committee were presented as the Delors Report in 1989.
In case of EMU there is a common market between all EU member states and the co-ordination of their economic policies through national convergence programmes and multilateral surveillance. Moreover, the European Central Bank (ECB), the main monetary authority of the EMU, co-ordinates monetary policies of all EU members which introduced the single currency after January 1999. The ECB with national central banks create the European System of Central Banks (ESCB) which is fully responsible for setting one common monetary policy.
Participants of EMU
Although all EU member countries are participants of EMU, only 16 of them have introduced the euro so far i.e.: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, The Netherlands, Portugal, Slovakia, Slovenia, Spain.
Convergence criteria
The Maastricht Treaty envisaged so called 'convergence' criteria to be satisfied before the member states could participate in the euro:
- the inflation rate no more than 1,5% above the average of the 3 countries having the lowest inflation rate in the EU
- the public debt of the country has to be less than 60% of GDP
- the national budget deficit has to be less than 3% of GDP
- the long-term interests should be no more than 2% above the average of the 3 countries with the lowest inflation rates
- the exchange rates of the country should be within the normal band (+/- 2,25%) of the Exchange Rate Mechanism (ERM) without tension and devaluation for 2 years before the assessment.
See also:
| Monetary union — recommended articles |
| International Monetary Fund — Washington consensus — Group of eight — Bank for International Settlements — European monetary system — Global bank — Equalization payment — Schengen Area — European regional development fund |
References
- Von Hagen, J., & Eichengreen, B. (1996). Federalism, fiscal restraints, and European monetary union. The American Economic Review, 86(2), 134-138.
Author: Przemysław Żur
