Chapter 20 Optimum Currency Areas and the European Experience
Chapter 20 ▪ Optimum Currency Areas and the European Experience
Chapter organization How the european Single Currency evolved The Euro and economic policy in the Euro Zone The Theory of Optimum Currency Areas The Future of emu Summary Copyright C 2003 Pearson Education, Inc Slide 20-2
Copyright © 2003 Pearson Education, Inc. Slide 20-2 Chapter Organization ▪ How the European Single Currency Evolved ▪ The Euro and Economic Policy in the Euro Zone ▪ The Theory of Optimum Currency Areas ▪ The Future of EMU ▪ Summary
Introduction European Union countries have progressively narrowed the fluctuations of their currencies against each other This culminated in the birth of the euro on January 1 1999 This chapter focuses on the following questions How and why did europe set up its single currency? Will the euro be good for the economies of its members? How will the euro affect countries outside of the European Monetary Union(EMU)? What lessons does the European experience carry for other potential currency blocks? Copyright C 2003 Pearson Education, Inc Slide 20-3
Copyright © 2003 Pearson Education, Inc. Slide 20-3 Introduction ▪ European Union countries have progressively narrowed the fluctuations of their currencies against each other. • This culminated in the birth of the euro on January 1, 1999. ▪ This chapter focuses on the following questions: • How and why did Europe set up its single currency? • Will the euro be good for the economies of its members? • How will the euro affect countries outside of the European Monetary Union (EMU)? • What lessons does the European experience carry for other potential currency blocks?
Introduction Figure 20-1: Members of the Euro Zone as of January 1, 2001 Sweden/ Finland Scotland Ireland Estonia Denman atvia England Bela. German Belar Luxembourg Poland France Czec Switz. Austria slovakia Ukraine Hung ry Portugal Italy Romania. Spain Yugoslavia Bulgar Greece Turke Copyright C 2003 Pearson Education, Inc Slide 20-4
Copyright © 2003 Pearson Education, Inc. Slide 20-4 Introduction Figure 20-1: Members of the Euro Zone as of January 1, 2001
How the european Single Currency evolved Table 20-1: A Brief Glossary of euronyms ECB European Central Bank ESCB European System of Central Banks EMS European monetary system EMU Economic and monetary Union ERM Exchange Rate mechanism SGP Stability and growth Pact Copyright C 2003 Pearson Education, Inc Slide 20-5
Copyright © 2003 Pearson Education, Inc. Slide 20-5 Table 20-1: A Brief Glossary of Euronyms How the European Single Currency Evolved