How the european Single Currency evolved The eu“1992” Initiative The eu countries have tried to achieve greater internal economic unity by Fixing mutual exchange rates Direct measures to encourage the free flow of goods services, and factors of production The process of market unification began when the original EU members formed their customs union in 1957 The Single European Act of 1986 provided for a free movement of people, goods, services, and capital and established many new policies Copyright C 2003 Pearson Education, Inc Slide 20-11
Copyright © 2003 Pearson Education, Inc. Slide 20-11 ▪ The EU “1992” Initiative • The EU countries have tried to achieve greater internal economic unity by: – Fixing mutual exchange rates – Direct measures to encourage the free flow of goods, services, and factors of production • The process of market unification began when the original EU members formed their customs union in 1957. • The Single European Act of 1986 provided for a free movement of people, goods, services, and capital and established many new policies. How the European Single Currency Evolved
How the european Single Currency evolved European economic and monetary Union In 1989, the Delors report laid the foundations for the single currency, the euro Economic and monetary union (EMU) A European Union in which national currencies are replaced by a single EU currency managed by a sole central bank that operates on behalf of all EU members Copyright C 2003 Pearson Education, Inc Slide 20-12
Copyright © 2003 Pearson Education, Inc. Slide 20-12 ▪ European Economic and Monetary Union ▪ In 1989, the Delors report laid the foundations for the single currency, the euro. • Economic and monetary union (EMU) – A European Union in which national currencies are replaced by a single EU currency managed by a sole central bank that operates on behalf of all EU members. How the European Single Currency Evolved
How the european Single Currency evolved Three stages of the Delors plan All eU members were to join the EMs exchange rate mechanism (ERM) Exchange rate margins were to be narrowed and certain macroeconomic policy decisions placed under more centralized eu control Replacement of national currencies by a single European currency and vesting all monetary policy decisions in a escB Copyright C 2003 Pearson Education, Inc Slide 20-13
Copyright © 2003 Pearson Education, Inc. Slide 20-13 • Three stages of the Delors plan: – All EU members were to join the EMS exchange rate mechanism (ERM) – Exchange rate margins were to be narrowed and certain macroeconomic policy decisions placed under more centralized EU control – Replacement of national currencies by a single European currency and vesting all monetary policy decisions in a ESCB How the European Single Currency Evolved