Despite these obstacles, the second half of the 20th century saw a constant search by the growing number of EU Member States for deeper economic integration as a means of strengthening the political bonds between them and protecting the common market.
Hit by oil crises, policy divergence and dollar weakness, within two years the snake had lost many of its component parts and was little more than a German-mark zone comprising Germany, Denmark and the Benelux countries.
The Member States agreed in principle in and began the first stage — narrowing currency fluctuations.
Currency turmoil strikes in the late s The Bretton Woods system had already begun to show signs of strain in the late s, and bya new era of currency instability threatened when market turbulence forced a revaluation of the German mark and devaluation of the French franc. Turmoil on international currency markets between and threatened the common price system of the common agricultural policy, a main pillar of what was then the European Economic Community.
The EMS represented a new and unprecedented coordination of monetary policies between the Member States, and operated successfully for over a decade. European leaders accepted the recommendations in the Delors Report.
It was clear that the full benefits of the internal market would be difficult to achieve with the relatively high business costs created by the existence of several currencies and unstable exchange rates. Get Full Essay Get access to this section to get all help you need with your essay and educational issues.
The heads of state and government at the European Council at Maastricht in December approved the Treaty on European Union in which it was decided that Europe would have a stable single currency by the end of the century.
The Community seeks economic prosperity and political development in EMU Against this troubling background, and with the customs union largely achieved, the Community was anxious to set itself new goals for political development during the next decade.
From Maastricht to the euro and the euro area, to The Delors Report proposed a three-stage preparatory period for economic and monetary union and the euro area, spanning the period to The EMS was a radical new departure because exchange rates could only be changed by mutual agreement between participating Member States and the Commission — an unprecedented pooling of monetary sovereignty.
For the following stages, substantial preparatory work by central bank governors greatly eased the work of revising the Treaty. At the same time, the euro area came into operation, and monetary policy passed to the European Central Bank ECBestablished a few months previously — 1 June — in preparation for the third stage of EMU.
More essays like this: And so to Maastricht On the basis of the Delors Report, the Madrid European Council of June decided to proceed to the first stage of EMU in Julyand the Strasbourg European Council called for an intergovernmental conference to determine the Treaty revisions that would be needed to move to the second and third stages and implement EMU.
This endangered the stability of other currencies and the common price system of the common agricultural policy — which was, at that time, the main achievement of the European Community. From the Treaty of Rome to the Werner Report, to The international currency stability that reigned in the immediate post-war period did not last.
Plan the transition to the euro. From the Werner Report to the European Monetary System, to The Werner group set out a three-stage process to achieve EMU within ten years, including the possibility of a single currency. Their unanimous report, submitted in Aprildefined the monetary union objective as a complete liberalisation of capital movements, full integration of financial markets, irreversible convertibility of currencies, irrevocable fixing of exchange rates, and the possible replacement of national currencies with a single currency.
The report indicated that this could be achieved in three stages, moving from closer economic and monetary coordination to a single currency with an independent European Central Bank and rules to govern the size and financing of national budget deficits.
But by the time of the negotiations on the Maastricht Treaty init had proved a success. Get Access Economic and Monetary Union EU Essay Sample Economic and monetary union was a recurring ambition for the European Union from the late s onwards because it promised stability and an environment for higher growth and employment.
The single currency would complete the single market The case for EMU turned on the need to complete the single market, the programme adopted in for removing all remaining barriers to the free movement of goods, services, people and capital.
The European Monetary System was built on the concept of stable but adjustable exchange rates defined in relation to the newly created European Currency Unit ECU — a currency basket based on a weighted average of EMS currencies.
Short-term volatility of exchange rates between European Community currencies was substantially reduced, thanks to a mixture of converging inflation rates, and interest rate management which targeted the exchange rate. The first stage of EMU involved completing the internal market, starting with the coordination of economic policies and removing obstacles to financial integration.
From the Werner Report to the European Monetary System, to The first stage, narrowing of exchange-rate fluctuations, was to be tried on an experimental basis without any commitment to the other stages.
This was a mechanism for managing fluctuations of their currencies the snake inside narrow limits against the dollar the tunnel. After a decade of preparations, the euro was launched on 1 January Implement binding budgetary rules in Member States.
However, a variety of political and economic obstacles barred the way. Weak political commitment, divisions over economic priorities and turbulence in international markets all played their role in frustrating progress towards EMU.
In the event of the maximum fluctuation margin being reached, central banks had to intervene by buying or selling the currency to avoid the margin being exceeded.
This success provided the impetus for further discussions between the Member States on achieving economic and monetary union. Define the future governance of the euro area the Stability and Growth Pact.
Subsequent attempts at achieving stable exchange rates were hit by oil crises and other shocks until, inthe European Monetary System EMS was launched.
Unfortunately, the Werner strategy took for granted fixed exchange rates against the dollar. The creation of the European Monetary System in laid the foundations for a new era of monetary co-operation.The Impacts of the Euro-Zone Crisis - The Euro-zone is an economic and monetary union (EMU), comprised 17 European Union (EU) member states, which have all adopted the Euro as their common currency and sole legal tender.
"The Euro Currency has been a resounding success and is poised to replace the Dollar as the strongest currency in the world. The potential long-term advantages for business make it inevitable that the UK, Sweden & Denmark will have to adopt the European Single Currency shortly or risk damaging their long-term prosperity by staying out".
The euro, the new European currency that is now adopted by 12 members of the European Union, has more of a competitive edge against the US dollar. After the introduction of the Euro to the financial world, changes took place across the 3/5(5). The European Parliament which represents the people, the Council of the EU which represents the governments of the member states, and the European Commission which represents the common interests of the people and the governments.
Analysis of the Euro Essay - Analysis of the Euro Analyzing the process leading up to the euro and the looking at the possible advantages and disadvantages that will result from the new currency are the key issues of this essay. Economic and Monetary Union EU Essay Sample.
Economic and monetary union was a recurring ambition for the European Union from the late s onwards because it promised stability and an environment for higher growth and employment.Download