E U TR E A TI E S

1. EU TREATIES

2. Amended and expanded theEESC (most importantly,by extending the scope ofqualified majorityvoting) and laid down new procedures for foreign policy cooperation Single European Act (1986) July1987 EstablishedtheEuropean Union; amended and expanded theEEC Treaty; created the co-decision procedure; created ‘pillars’ of CommonForeign and SecurityPolicy(CFSP) andCooperation in theFieldsofJustice andHome Affairs (JHA) Treaty on European Union (MaastrichtTreaty,1992) November 1993 Treaty ofAmsterdam(1997) May1999 Amended the Maastricht Treaty and theEECTreaty; extended co-decision; added new provisionsonsocial policy; incorporated theSchengen acquis into EECTreaty; created `constructive abstention';strengthenedtransparency Changed voting procedures;overhauled the EU’sinstitutions; prepared theEUfor enlargement; amended provisionsonsuspensionand flexibility Treaty ofNice(2000) 2001 overhaul of EU institutions;common foreignpolicy; other changes. Rejected in areferendumby theFrenchand Dutch EU Constitution(2004) 2007 Lisbon Treaty 2009 to replacetheconstitution.

3. The EURO

4. OnecurrencyforoneEuropeTheroadtotheeuro theeUroarea Sweden Euroarea Finland EUMemberStates withanopt-out Helsinki Tallinn Estonia EUMemberStatesthathave notyetadoptedtheeuro Stockholm Latvia Riga Denmark Copenhagen Lithuania Vilnius Dublin Ireland United Kingdom London Nether- lands Amsterdam Brussels Belgium Warsaw Berlin Poland Germany Prague Czech Republic Luxembourg Luxembourg Slovakia Bratislava Budapest Hungary Paris Vienna Austria Slovenia Ljubljana Romania France Bucharest Bulgaria Sofia Italy Portugal Lisbon Rome Madrid Spain Greece Athens Statusasof1January2007 Valletta Malta Madeira(PT) CanaryIslands (ES) Azores(PT) French GuadeloupeMartiniqueRéunion Guiana(FR)(FR)(FR) (FR) Cyprus Nicosia 14

5. What The euro is the single currency shared by (currently) 17 of the European Union's Member States, which together make up the euro area. The introduction of the euro in 1999 was a major step in European integration. It has also been one of its major successes: around 330 million EU citizens now use it as their currency and enjoy its benefits, which will spread even more widely as other EU countries adopt the euro.

6. Who and When

7. Euro and EMU The euro and Economic and Monetary Union All EU Member States form part of Economic and Monetary Union (EMU), which can be described as an advanced stage of economic integration based on a single market. It involves close co-ordination of economic and fiscal policies and, for those countries fulfilling certain conditions, a single monetary policy and a single currency – the euro. The process of economic and monetary integration in the EU parallels the history of the Union itself. When the EU was founded in 1957, the Member States concentrated on building a 'common market'. However, over time it became clear that closer economic and monetary co-operation was desirable for the internal market to develop and flourish further. But the goal of achieving the EMU including  a single currency was not enshrined until the 1992 Maastricht Treaty (Treaty on European Union), which set out the ground rules for its introduction. These state what the objectives of EMU are, who is responsible for what, and what conditions Member States must meet in order to adopt the euro. These conditions are known as the 'convergence criteria' (or 'Maastricht criteria') and include low and stable inflation, exchange rate stability and sound public finances

8. WHY? Apart from making travelling easier within the EU, a single currency makes economic and political sense. The framework under which the euro is managed underpins its stability, contributes to low inflation and encourages sound public finances. A single currency is also a logical complement to the single market and contributes to making it more efficient. Using a common currency increases price transparency, eliminates currency exchange costs, facilitates international trade and gives the EU a more powerful voice in the world. The size and strength of the euro area also better protect it from external economic shocks, such as unexpected oil price rises or turbulence in the currency markets. Last but not least, the euro gives the EU’s citizens a tangible symbol of their European identity.

9. Money: Notes and Coins

10. SAN MARINO

11. FRANCE

12. EMS, ECU, ERM, EMU, EMI, ECB • EUROPEAN MONETARY SYSTEM (EMS) AND FREE TRADE SYSTEM • Launched in 1979 • Was to create a “zone of monetary stability in Europe” • Its central features were: • the European Currency Unit (ECU) and • The Exchange-Rate Mechanism (ERM) • The Loan Facility is European Investment Bank (EIB) • The currencies of the Member States’ were pegged to ECU through ERM, • which constituted the EMS. • All Members had to join the EMS, but did not have to join the ERM. • The UK did not. • Greece only joined in 1998. • The EMS led to the ECONOMIC AND MONETARY UNION (EMU) • EMU was added to the Rome Treaty by the Maastricht Treaty of 1993. • EMU is SINGLE MARKET (as opposed to free trade area) • EMU had 3 stages: • July 1990, removal of exchange controls to be moved entirely to ERM • January 1994, the creation of the European Monetary Institute (EMI), central banks of • Member States’ became independent, plus the signing of the Amsterdam Treaty and • the Stability and Growth Pact • May 1998 the establishment of European Central Bank, and the introduction of the EURO € • First introduced as a noncash monetary unit in 1999 • Then, on January 1, 2002 as physical currency. • After February 28, 2002, the euro became the sole currency of 12 member states • Maastricht Treaty (1993) and its Social Protocols

14. EMU GOVERNANCE • Within EMU there is no single institution responsible for economic policy. Instead, the responsibility is divided between Member States and the EU institutions. The main actors in EMU are: • The European Council – sets the main policy orientations • The Council of the EU (the 'Council') – coordinates EU economic policy-making and decides whether a Member State may adopt the euro • The 'Eurogroup' – coordinates policies of common interest for the euro-area Member States • The Member States – set their national budgets within agreed limits for deficit and debt, and determine their own structural policies involving labour, pensions and capital markets • The European Commission – monitors performance and compliance • The European Central Bank (ECB) – sets monetary policy, with price stability as the primary objective. • The European Parliament - shares the job of formulating legislation with the Council, and subjects economic governance to democratic scrutiny in particular through the new Economic Dialogue.

15. What is Economic Integration? Generally, economic and monetary union is an advanced step in the process of economic integration. The degrees of economic integration can be divided into six steps: Preferential trading area (with reduced customs tariffs between certain countries) Free trade area (with no internal tariffs on some or all goods between the participating countries) Customs union (with the same external customs tariffs for third countries and a common trade policy) Single market (with common product regulations and free movement of goods, capital, labour and services) Economic and monetary union (a single market with a common currency and monetary policy) Complete economic integration (all the above plus harmonised fiscal and other economic policies). When the European Union was founded in 1958 as the European Economic Community, the aim was to build a customs union and a common market for agriculture. Subsequently, this limited common market was extended to cover also goods and services in the single market, which was largely completed by 1993. Today, the European Union is on the fifth step of this model. Progressive economic integration did not start with the decision to create the euro: it is a long process, part of the history of the EU, and one of its major achievements

16. Goal of EMU “Economic and Monetary Union is not an end in itself. It is an instrument to further the objectives of the European Union and improve the lives of citizens in the Member States.”

17. How to join? Adopting the euro and joining the euro area takes integration a step further – it is a process of much closer economic integration with the other euro-area Member States. Adopting the euro also demands extensive preparations; in particular it requires economic and legal convergence Preparing for entry Before a Member State can adopt the euro, it must fulfil certain economic and legal criteria. The economic ‘convergence criteria’ are designed to ensure that a Member State's economy is sufficiently prepared for adoption of the single currency and can integrate smoothly into the monetary regime of the euro area. Legal convergence requires that national legislation, in particular the national central bank and monetary issues, is compatible with the Treaty. Replacing a national currency with the euro is a major operation that demands many practical preparations, for instance ensuring that the national currency is withdrawn quickly, that prices of goods are properly converted and displayed, and that people are kept well informed. All these preparations rely on the particular ‘changeover scenario’ that a euro-area candidate country adopts. Significant experience was gained when the euro was first launched, which benefits euro-area candidate countries today. The European Commission, in particular, offers much help and advice to euro-area candidate countries.

18. ERM Exchange Rate Mechanism (ERM II) Some non-euro-area countries are already members of the Exchange Rate Mechanism (ERM II). ERM II is a system designed to avoid excessive exchange-rate fluctuations between the participating currencies and the euro that might disrupt economic stability within the single market. Participation is voluntary, but it is also one of the 'convergence criteria' – euro-area candidate countries must participate, without severe tensions, for at least two years before they can qualify to adopt the euro.

19. How Does ERM II WORK? • In ERM II, the exchange rate of a non-euro area Member State is fixed against the euro and is only allowed to fluctuate within set limits. ERM II entry is based on an agreement between the ministers and central bank governors of the non-euro area Member State and the euro-area Member States, and the European Central Bank (ECB). It covers the following: • A central exchange rate between the euro and the country's currency is agreed. The currency is then allowed to fluctuate by up to 15% above or below this central rate. • When necessary, the currency is supported by intervention (buying or selling) to keep the exchange rate against the euro within the ±15% fluctuation band. Interventions are coordinated by the ECB and the central bank of the non-euro area Member State. • Non-euro area Member States within ERM II can decide to maintain a narrower fluctuation band, but this decision has no impact on the official ±15% fluctuation margin, unless there is agreement on this by ERM II stakeholders. • The General Council of the ECB monitors the operation of ERM II and ensures co-ordination of monetary- and exchange-rate policies. The General Council also administers the intervention mechanisms together with the Member State’s central bank.

20. EU currencies included in the Exchange Rate Mechanism (ERM II) Denmark – The Kroner Greece – The Drachma € Estonia – The Kroon € Lithuania – The Kroon Slovenia – The Tolar € Cyprus – The Pound € Latvia – The Lats € (Jan 1, 2014) Malta – The Lira € Slovakia – The Koruna €

21. The Euro in the World • As well as serving as the currency of the euro area, the euro has a strong international presence. Currencies are the means by which wealth is stored, protected and exchanged between countries, organisations and individuals. A global currency, such as the euro, does this on a global scale. Since its introduction in 1999, it has firmly established itself as a major international currency, second only to the US dollar. • The euro is increasingly used to issue government and corporate debt worldwide. At the end of 2006, the share of the euro in international debt markets was around one-third, while the US dollar accounted for 44%. • Global banks make significant loans denominated in euro around the world. • The euro is the second most actively traded currency in foreign exchange markets; it is a counterpart in around 40% of the daily transactions. • The euro is extensively used for invoicing and paying in international trade, not only between the euro area and third countries but also, to a lesser extent, between third countries. • The euro is widely used, alongside the US dollar, as an important reserve currency to hold for monetary emergencies. At the end of 2006, more than one-quarter of the global foreign exchange holdings were being held in euros, compared to 18% in 1999. Developing countries are among those which have increased their reserves in euro the most, from 18% in 1999 to around 30% in 2006. • Several countries manage their currencies by linking them to the euro, which acts as an anchor or reference currency.

23. ECB The European Central Bank The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area. The euro area comprises the 17 European Union countries that have introduced the euro since 1999 The Eurosystem The Eurosystem comprises the ECB and the NCBs of those countries that have adopted the euro. The Eurosystem and the ESCB (European System of Central Banks) will co-exist as long as there are EU Member States outside the euro area The mission of the European Central Bank The European Central Bank and the national central banks together constitute the Eurosystem, the central banking system of the euro area. The main objective of the Eurosystem is to maintain price stability: safeguarding the value of the euro. We at the European Central Bank are committed to performing all central bank tasks entrusted to us effectively. In so doing, we strive for the highest level of integrity, competence, efficiency and transparency.

24. SINGLE POLCY vs. COMMON POLICY