A Short Guide to the Euro

Home , Euro, European Central Bank, European Fiscal Compact, European Union, Euro banknotes, Euro coins

Financial Aﬀairs Financial

doi:10.2765/10919

Economic and and Economic

ISBN 978-92-79-43088-6 ISBN

Growth Pact. Pact. Growth

through a framework known as the Stability and and Stability the as known framework a through

commitment to sound ﬁscal policies is monitored monitored is policies ﬁscal sound to commitment

to keep public debt at sustainable levels. This This levels. sustainable at debt public keep to

to avoid large and excessive budget deﬁcits and and deﬁcits budget excessive and large avoid to

since the outset, has come with a ﬁrm obligation obligation ﬁrm a with come has outset, the since

Reproduction is authorised provided the source is acknowledged. is source the provided authorised is Reproduction policies. This is why membership of the euro, euro, the of membership why is This policies. of all Member States in the euro area. euro the in States Member all of

© European Union, 2015 Union, European © if participating countries have sound economic economic sound have countries participating if the Eurogroup is comprised of ﬁnance ministers ministers ﬁnance of comprised is Eurogroup the

The euro offers many potential benefits, but only only but benefits, potential many offers euro The of the finance ministers of all EU Member States ; ; States Member EU all of ministers finance the of stability. price maintaining of aim the with area

www.ecb.eu

of the decisions are made. ECOFIN is comprised comprised is ECOFIN made. are decisions the of euro the in policy monetary on decisions makes

The European Central Bank : Bank Central European The

the euro area area euro the These are the Council meetings where the bulk bulk the where meetings Council the are These which institution EU independent an is ECB The

as to make a success of being in in being of success a make to as

www.ec.europa.eu

Ensuring sound public ﬁnances so so ﬁnances public sound Ensuring Eurogroup the and ECOFIN (ECB) Bank Central European The European Commission : Commission European The

www.ec.europa.eu/economy_ﬁnance/index_en.htm

European Commission Directorate-General for Economic and Financial Aﬀairs : Aﬀairs Financial and Economic for Directorate-General Commission European rate. be enacted. be above. explained legislation

rest rates as well as having a stable exchange exchange stable a having as well as rates rest opinion on whether or not a given policy should should policy given a not or whether on opinion the develop further and implement helps and EU

www.ec.europa.eu/euro

terms of low inﬂation rates and long-term inte- long-term and rates inﬂation low of terms damaging bubbles in housing markets. markets. housing in bubbles damaging decides, together with the Council, or gives its its gives or Council, the with together decides, the throughout developments economic monitor

The euro : euro The

macroeconomic stability and competitiveness in in competitiveness and stability macroeconomic surveillance instruments also aim to prevent prevent to aim also instruments surveillance of this process. It hears, discusses, and votes. It It votes. and discusses, hears, It process. this of particular, in ECFIN), (DG Aﬀairs Financial and mic

that countries have achieved a high degree of of degree high a achieved have countries that Prevention is better than cure, and these new new these and cure, than better is Prevention The European Parliament is the legislative body body legislative the is Parliament European The Econo- for department its and Commission, The

deﬁcit and public debt. They also seek to ensure ensure to seek also They debt. public and deﬁcit petitiveness and promote growth as well as jobs. jobs. as well as growth promote and petitiveness

European Parliament (EP) (EP) Parliament European Commission European reference to benchmarks on the level of budget budget of level the on benchmarks to reference tries adopt economic policies that ensure com- ensure that policies economic adopt tries

For more info more For public ﬁnances are on a sustainable footing with with footing sustainable a on are ﬁnances public established to make sure that euro area coun- area euro that sure make to established

New surveillance instruments have also been been also have instruments surveillance New entry or convergence criteria examine whether whether examine criteria convergence or entry

ready to have the euro as their currency. These These currency. their as euro the have to ready sely monitoring ﬁnancial market developments. developments. market ﬁnancial monitoring sely

Who’s who? who? Who’s

of entry criteria to show that their economies are are economies their that show to criteria entry of to the regulation of ﬁnancial services and for clo- for and services ﬁnancial of regulation the to

tries wishing to join, however, must fulﬁl a number number a fulﬁl must however, join, to wishing tries crisis also revealed the need for a new approach approach new a for need the revealed also crisis

All EU countries are eligible to join the euro. Coun- euro. the join to eligible are countries EU All having a thriving economy in the euro area. The The area. euro the in economy thriving a having

Sound public ﬁnances are not the only key to to key only the not are ﬁnances public Sound

to the euro the to Joining the club the Joining

promoting growth promoting Cyprus

Ensuring competitiveness and and competitiveness Ensuring

Malta

Greece reoccurance of similar crises in the future. future. the in crises similar of reoccurance

very from the current crisis and help prevent a a prevent help and crisis current the from very

sanctions can be imposed if needed. needed. if imposed be can sanctions changes will support our economies in the reco- the in economies our support will changes A short guide short A

have committed themselves to achieve, and and achieve, to themselves committed have their economic and budgetary policies. These These policies. budgetary and economic their Bulgaria

Italy

the budget targets which all euro area countries countries area euro all which targets budget the through which euro area countries coordinate coordinate countries area euro which through

Spain

Romania

in place to check that countries will indeed meet meet indeed will countries that check to place in EU has strengthened the rules and procedures procedures and rules the strengthened has EU Croatia

Slovenia

countries. Rigorous surveillance mechanisms are are mechanisms surveillance Rigorous countries. nating economic policies in EMU. In response, the the response, In EMU. in policies economic nating Hungary Portugal

Austria

France scrutiny by the Commission and other euro area area euro other and Commission the by scrutiny vealed weaknesses in the framework for coordi- for framework the in weaknesses vealed Slovakia

must now submit their dra budget plans for for plans budget dra their submit now must The recent ﬁnancial and sovereign debt crisis re- crisis debt sovereign and ﬁnancial recent The Czech Rep. Czech

Luxembourg

adopted the euro the adopted as a result of the economic crisis. Governments Governments crisis. economic the of result a as Germany

Belgium

EU Member States that have not yet yet not have that States Member EU Poland

Bumps along the road the along Bumps

This pact has been considerably strengthened strengthened considerably been has pact This

Netherlands

EU Member States with an opt-out an with States Member EU Lithuania

The The Kingdom

Euro area area Euro Latvia

United United

Denmark

Estonia Ireland

the euro the

Sweden

adopting & governing & adopting Finland Rules of the game : : game the of Rules KC-06-14-059-EN-N

About the euro Weighing up the beneﬁts Euro myths : think again

In 1999 the euro was born : it first appeared on payslips, bills and invoices. On The euro has faced some well-documented The euro is also easily exchanged in many coun- What’s in it for Europe? Euro myth : the euro caused Euro myth : the euro means 1 January 2002, euro banknotes and coins entered European bank tills, cash challenges in recent years. The debt crisis re- tries outside the euro area – it is estimated that, prices to rise an unwelcome loss of national vealed weak spots that needed to be carefully in terms of value, between 20 % and 25 % of sovereignty registers, purses and pockets for the first time. This marked another major step examined and addressed. The framework for ha- euro banknotes circulate outside the euro area. More integrated financial markets Greater ease of international trade towards European economic integration, a journey which began with the foun- ving an Economic and Monetary Union (EMU) has By lowering inflation and increasing competition, Some sovereignty is voluntarily pooled when a ding of the European Economic Community in 1957. been strengthened as a result. Economic and monetary integration makes it The euro is being increasingly used for interna- the euro actually makes life cheaper! As a mat- country adopts the euro, as governments must co- What’s in it for business? much easier for investment capital to move to tional trade transactions because of its strength ter of fact, consumer price data shows that, on ordinate their economic policies and control their While it has been important to reflect on the where it can be used most efficiently. An ex- and availability, and the confidence it inspires. average, euro adoption caused far fewer price spending. In today’s globalised world, national sov- Then and now : Steps towards the euro problems of economic governance, we should It’s simple : panded euro area financial market, which is pro- This allows euro area businesses to pay, and be increases than is commonly believed and the ereignty is a relative concept. By coordinating their not forget the huge benefits that the euro has perly regulated and supervised, also makes more paid, in euro, making them less vulnerable to overall effect on prices was very small (a one-off policies, governments can actually gain influence brought to Europe, its citizens and businesses. Lower interest rates = capital available for investment and allows in- global currency fluctuations and easing trade for impact of between 0.1 and 0.3% in 2002). and power in the economic sphere. The European Economic Community is founded, opening a common market for goods, more investment vestors to spread risks more widely. our partners. 1957 people, services and capital to move ever more freely between Member States. Low inflation keeps interest rates low. The common market thrives and expands but trade is hindered because of the numerous What’s in it for citizens? currencies in circulation. Businesses can borrow more cheaply to invest The euro area has a greater in, for example, new machinery or research international presence The Maastricht Treaty decides that Europe will have a strong and stable single currency and development. 1992 for the 21st century. New products, new services and higher The big players in the global economy meet in Facts and figures productivity. international groupings, such as the Internatio- The euro is launched as a ‘virtual’ currency. Economic growth and more and better jobs. nal Monetary Fund (IMF) and the G7/G20, to pro- 1999 More choice, better prices mote stability in global markets. The euro is now For the introduction of the euro, 38 billion coins came into circulation. The euro comes to life and around 8 billion euro banknotes and 38 billion euro coins the second most important world currency aer That’s around 124 euro coins for every person in the euro area at that time begin to circulate. There is more competition between shops and Economic stability encourages the US dollar. As one of the most important eco- 2002 suppliers. This means that we benefit from lower long-term planning nomic areas in the world, the EU has a stronger In the first decade aer The average cost of Since December 2006, the The enlargement of the euro area, which has created the world’s second largest prices and price increases are kept in check. voice in the world. the euro’s introduction in transferring € 100 has value of euro banknotes economy, is an ongoing process. Today, European businesses are in a better po- 1999, around 8.7 million been reduced from and coins in circulation has sition to make long-term investments. Interest new jobs were created in € 24 to € 2.40 since rules generally been higher than Cross-border shopping is rates are stable so it’s easier to predict whether the euro area, compared on cross-border euro the value of US dollar cash What’s the aim? The euro around the world simply easier! their investment will generate a profit. Euro benefits : A quick recap with only 1.5 million in the payments were introduced in circulation. previous seven years. in 2001. The euro and the Economic and Monetary Union – You might be surprised to learn just how well-trav- Within the euro area, we don’t have to calculate The EMU and the euro give us : EMU aim to allow our economies to function more elled the euro is! It is used in the Caribbean (Gua- exchange rates, we can now clearly compare Lower risks and reduced costs efficiently and effectively, ultimately offering deloupe, Martinique and Saint-Barthélémy), in the prices and we have more choice. encourage cross-border trade and • a stable currency Europeans more jobs and greater prosperity. Indian Ocean (Mayotte and Réunion) and the At- investments € 24 lantic Ocean (Azores, Canaries, Madeira and Saint • low inflation and lower interest rates 8.7m Pierre and Miquelon) as well as in Ceuta and Me- A stable currency In the past, trade between EU countries invol- • price transparency A closer look at the euro lilla on the north coast of Africa and French Guiana ved many currencies with fluctuating exchange in South America. It is also used in Monaco, San The inflation rate in the euro area has been around rates. To cope with this risk, companies tended to • elimination of currency exchange costs The symbol of the euro is € . Marino, the Vatican City and Andorra as the na- 2 % each year since the start of the euro. This is sell at a higher price abroad, which discouraged The design of euro banknotes is common to all tional currency, and in Kosovo and Montenegro as remarkably stable and low when we compare it to trade. This risk is now gone. • more integrated financial markets with adequate euro area Member States. the de facto currency. the rate of 20 % (and sometimes more) that some regulation and supervision EU countries experienced in the 1970s and 1980s. Additionally, trade within a single market using • a better performing economy 1.5m € 2.40 Various security features have been incorporated the same currency is simply more efficient than into the euro banknotes. Have a good look at trade across many markets using multiple curren- • a framework for sounder public finances 2001 2006 them to check for yourself! Cheaper and easier travel cies. Before the euro, the cost of exchanging cur- • a stronger voice for the EU in the global economy 1992 1999 2009 rencies in the EU was estimated at € 20-25 bil- Euro coins have a uniform design on one side and When travelling within the euro area, our lives are lion annually. These costs have now disappeared • greater ease of international trade Supporting job creation Reducing transfer fees Competing worldwide a country-specific design on the other. made far easier than before - we do not need to within the euro area. exchange currencies and therefore we do not pay • a tangible symbol of European identity any exchange fees.

Financial Aﬀairs Financial

doi:10.2765/10919

Economic and and Economic

ISBN 978-92-79-43088-6 ISBN

Growth Pact. Pact. Growth

through a framework known as the Stability and and Stability the as known framework a through

commitment to sound ﬁscal policies is monitored monitored is policies ﬁscal sound to commitment

to keep public debt at sustainable levels. This This levels. sustainable at debt public keep to

to avoid large and excessive budget deﬁcits and and deﬁcits budget excessive and large avoid to

since the outset, has come with a ﬁrm obligation obligation ﬁrm a with come has outset, the since

www.ecb.eu

of the decisions are made. ECOFIN is comprised comprised is ECOFIN made. are decisions the of euro the in policy monetary on decisions makes

The European Central Bank : Bank Central European The

the euro area area euro the These are the Council meetings where the bulk bulk the where meetings Council the are These which institution EU independent an is ECB The

as to make a success of being in in being of success a make to as

www.ec.europa.eu

Ensuring sound public ﬁnances so so ﬁnances public sound Ensuring Eurogroup the and ECOFIN (ECB) Bank Central European The European Commission : Commission European The

www.ec.europa.eu/economy_ﬁnance/index_en.htm

www.ec.europa.eu/euro

The euro : euro The

deﬁcit and public debt. They also seek to ensure ensure to seek also They debt. public and deﬁcit petitiveness and promote growth as well as jobs. jobs. as well as growth promote and petitiveness

New surveillance instruments have also been been also have instruments surveillance New entry or convergence criteria examine whether whether examine criteria convergence or entry

ready to have the euro as their currency. These These currency. their as euro the have to ready sely monitoring ﬁnancial market developments. developments. market ﬁnancial monitoring sely

Who’s who? who? Who’s

All EU countries are eligible to join the euro. Coun- euro. the join to eligible are countries EU All having a thriving economy in the euro area. The The area. euro the in economy thriving a having

Sound public ﬁnances are not the only key to to key only the not are ﬁnances public Sound

to the euro the to Joining the club the Joining

promoting growth promoting Cyprus

Ensuring competitiveness and and competitiveness Ensuring

Malta

Greece reoccurance of similar crises in the future. future. the in crises similar of reoccurance

very from the current crisis and help prevent a a prevent help and crisis current the from very

sanctions can be imposed if needed. needed. if imposed be can sanctions changes will support our economies in the reco- the in economies our support will changes A short guide short A

have committed themselves to achieve, and and achieve, to themselves committed have their economic and budgetary policies. These These policies. budgetary and economic their Bulgaria

Italy

the budget targets which all euro area countries countries area euro all which targets budget the through which euro area countries coordinate coordinate countries area euro which through

Spain

Romania

in place to check that countries will indeed meet meet indeed will countries that check to place in EU has strengthened the rules and procedures procedures and rules the strengthened has EU Croatia

Slovenia

Austria

France scrutiny by the Commission and other euro area area euro other and Commission the by scrutiny vealed weaknesses in the framework for coordi- for framework the in weaknesses vealed Slovakia

Luxembourg

adopted the euro the adopted as a result of the economic crisis. Governments Governments crisis. economic the of result a as Germany

Belgium

EU Member States that have not yet yet not have that States Member EU Poland

Bumps along the road the along Bumps

This pact has been considerably strengthened strengthened considerably been has pact This

Netherlands

EU Member States with an opt-out an with States Member EU Lithuania

The The Kingdom

Euro area area Euro Latvia

United United

Denmark

Estonia Ireland

the euro the

Sweden

adopting & governing & adopting Finland Rules of the game : : game the of Rules KC-06-14-059-EN-N

About the euro Weighing up the beneﬁts Euro myths : think again

Financial Aﬀairs Financial

doi:10.2765/10919

Economic and and Economic

ISBN 978-92-79-43088-6 ISBN

Growth Pact. Pact. Growth

through a framework known as the Stability and and Stability the as known framework a through

commitment to sound ﬁscal policies is monitored monitored is policies ﬁscal sound to commitment

to keep public debt at sustainable levels. This This levels. sustainable at debt public keep to

to avoid large and excessive budget deﬁcits and and deﬁcits budget excessive and large avoid to

since the outset, has come with a ﬁrm obligation obligation ﬁrm a with come has outset, the since

www.ecb.eu

of the decisions are made. ECOFIN is comprised comprised is ECOFIN made. are decisions the of euro the in policy monetary on decisions makes

The European Central Bank : Bank Central European The

the euro area area euro the These are the Council meetings where the bulk bulk the where meetings Council the are These which institution EU independent an is ECB The

as to make a success of being in in being of success a make to as

www.ec.europa.eu

Ensuring sound public ﬁnances so so ﬁnances public sound Ensuring Eurogroup the and ECOFIN (ECB) Bank Central European The European Commission : Commission European The

www.ec.europa.eu/economy_ﬁnance/index_en.htm

www.ec.europa.eu/euro

The euro : euro The

deﬁcit and public debt. They also seek to ensure ensure to seek also They debt. public and deﬁcit petitiveness and promote growth as well as jobs. jobs. as well as growth promote and petitiveness

New surveillance instruments have also been been also have instruments surveillance New entry or convergence criteria examine whether whether examine criteria convergence or entry

ready to have the euro as their currency. These These currency. their as euro the have to ready sely monitoring ﬁnancial market developments. developments. market ﬁnancial monitoring sely

Who’s who? who? Who’s

All EU countries are eligible to join the euro. Coun- euro. the join to eligible are countries EU All having a thriving economy in the euro area. The The area. euro the in economy thriving a having

Sound public ﬁnances are not the only key to to key only the not are ﬁnances public Sound

to the euro the to Joining the club the Joining

promoting growth promoting Cyprus

Ensuring competitiveness and and competitiveness Ensuring

Malta

Greece reoccurance of similar crises in the future. future. the in crises similar of reoccurance

very from the current crisis and help prevent a a prevent help and crisis current the from very

sanctions can be imposed if needed. needed. if imposed be can sanctions changes will support our economies in the reco- the in economies our support will changes A short guide short A

have committed themselves to achieve, and and achieve, to themselves committed have their economic and budgetary policies. These These policies. budgetary and economic their Bulgaria

Italy

the budget targets which all euro area countries countries area euro all which targets budget the through which euro area countries coordinate coordinate countries area euro which through

Spain

Romania

in place to check that countries will indeed meet meet indeed will countries that check to place in EU has strengthened the rules and procedures procedures and rules the strengthened has EU Croatia

Slovenia

Austria

France scrutiny by the Commission and other euro area area euro other and Commission the by scrutiny vealed weaknesses in the framework for coordi- for framework the in weaknesses vealed Slovakia

Luxembourg

adopted the euro the adopted as a result of the economic crisis. Governments Governments crisis. economic the of result a as Germany

Belgium

EU Member States that have not yet yet not have that States Member EU Poland

Bumps along the road the along Bumps

This pact has been considerably strengthened strengthened considerably been has pact This

Netherlands

EU Member States with an opt-out an with States Member EU Lithuania

The The Kingdom

Euro area area Euro Latvia

United United

Denmark

Estonia Ireland

the euro the

Sweden

adopting & governing & adopting Finland Rules of the game : : game the of Rules KC-06-14-059-EN-N

About the euro Weighing up the beneﬁts Euro myths : think again

Financial Aﬀairs Financial

doi:10.2765/10919

Economic and and Economic

ISBN 978-92-79-43088-6 ISBN

Growth Pact. Pact. Growth

through a framework known as the Stability and and Stability the as known framework a through

commitment to sound ﬁscal policies is monitored monitored is policies ﬁscal sound to commitment

to keep public debt at sustainable levels. This This levels. sustainable at debt public keep to

to avoid large and excessive budget deﬁcits and and deﬁcits budget excessive and large avoid to

since the outset, has come with a ﬁrm obligation obligation ﬁrm a with come has outset, the since

www.ecb.eu

of the decisions are made. ECOFIN is comprised comprised is ECOFIN made. are decisions the of euro the in policy monetary on decisions makes

The European Central Bank : Bank Central European The

the euro area area euro the These are the Council meetings where the bulk bulk the where meetings Council the are These which institution EU independent an is ECB The

as to make a success of being in in being of success a make to as www.ec.europa.eu

Ensuring sound public ﬁnances so so ﬁnances public sound Ensuring Eurogroup the and ECOFIN (ECB) Bank Central European The European Commission : Commission European The

www.ec.europa.eu/economy_ﬁnance/index_en.htm

www.ec.europa.eu/euro

The euro : euro The

deﬁcit and public debt. They also seek to ensure ensure to seek also They debt. public and deﬁcit petitiveness and promote growth as well as jobs. jobs. as well as growth promote and petitiveness

New surveillance instruments have also been been also have instruments surveillance New entry or convergence criteria examine whether whether examine criteria convergence or entry

ready to have the euro as their currency. These These currency. their as euro the have to ready sely monitoring ﬁnancial market developments. developments. market ﬁnancial monitoring sely

Who’s who? who? Who’s

All EU countries are eligible to join the euro. Coun- euro. the join to eligible are countries EU All having a thriving economy in the euro area. The The area. euro the in economy thriving a having

Sound public ﬁnances are not the only key to to key only the not are ﬁnances public Sound

to the euro the to Joining the club the Joining

promoting growth promoting Cyprus

Ensuring competitiveness and and competitiveness Ensuring

Malta

Greece reoccurance of similar crises in the future. future. the in crises similar of reoccurance

very from the current crisis and help prevent a a prevent help and crisis current the from very

sanctions can be imposed if needed. needed. if imposed be can sanctions changes will support our economies in the reco- the in economies our support will changes A short guide short A

have committed themselves to achieve, and and achieve, to themselves committed have their economic and budgetary policies. These These policies. budgetary and economic their Bulgaria

Italy

the budget targets which all euro area countries countries area euro all which targets budget the through which euro area countries coordinate coordinate countries area euro which through

Spain

Romania

in place to check that countries will indeed meet meet indeed will countries that check to place in EU has strengthened the rules and procedures procedures and rules the strengthened has EU Croatia

Slovenia

Austria

France scrutiny by the Commission and other euro area area euro other and Commission the by scrutiny vealed weaknesses in the framework for coordi- for framework the in weaknesses vealed Slovakia

Luxembourg

adopted the euro the adopted as a result of the economic crisis. Governments Governments crisis. economic the of result a as Germany

Belgium

EU Member States that have not yet yet not have that States Member EU Poland

Bumps along the road the along Bumps

This pact has been considerably strengthened strengthened considerably been has pact This

Netherlands

EU Member States with an opt-out an with States Member EU Lithuania

The The Kingdom

Euro area area Euro Latvia

United United

Denmark

Estonia Ireland

the euro the

Sweden

adopting & governing & adopting Finland Rules of the game : : game the of Rules KC-06-14-059-EN-N

About the euro Weighing up the beneﬁts Euro myths : think again

Financial Aﬀairs Financial

doi:10.2765/10919

Economic and and Economic

ISBN 978-92-79-43088-6 ISBN

Growth Pact. Pact. Growth

through a framework known as the Stability and and Stability the as known framework a through

commitment to sound ﬁscal policies is monitored monitored is policies ﬁscal sound to commitment

to keep public debt at sustainable levels. This This levels. sustainable at debt public keep to

to avoid large and excessive budget deﬁcits and and deﬁcits budget excessive and large avoid to

since the outset, has come with a ﬁrm obligation obligation ﬁrm a with come has outset, the since

www.ecb.eu

of the decisions are made. ECOFIN is comprised comprised is ECOFIN made. are decisions the of euro the in policy monetary on decisions makes

The European Central Bank : Bank Central European The

the euro area area euro the These are the Council meetings where the bulk bulk the where meetings Council the are These which institution EU independent an is ECB The

as to make a success of being in in being of success a make to as www.ec.europa.eu

Ensuring sound public ﬁnances so so ﬁnances public sound Ensuring Eurogroup the and ECOFIN (ECB) Bank Central European The European Commission : Commission European The

www.ec.europa.eu/economy_ﬁnance/index_en.htm

www.ec.europa.eu/euro

The euro : euro The

deﬁcit and public debt. They also seek to ensure ensure to seek also They debt. public and deﬁcit petitiveness and promote growth as well as jobs. jobs. as well as growth promote and petitiveness

New surveillance instruments have also been been also have instruments surveillance New entry or convergence criteria examine whether whether examine criteria convergence or entry

ready to have the euro as their currency. These These currency. their as euro the have to ready sely monitoring ﬁnancial market developments. developments. market ﬁnancial monitoring sely

Who’s who? who? Who’s of entry criteria to show that their economies are are economies their that show to criteria entry of to the regulation of ﬁnancial services and for clo- for and services ﬁnancial of regulation the to

All EU countries are eligible to join the euro. Coun- euro. the join to eligible are countries EU All having a thriving economy in the euro area. The The area. euro the in economy thriving a having

Sound public ﬁnances are not the only key to to key only the not are ﬁnances public Sound

to the euro the to Joining the club the Joining

promoting growth promoting Cyprus

Ensuring competitiveness and and competitiveness Ensuring

Malta

Greece reoccurance of similar crises in the future. future. the in crises similar of reoccurance

very from the current crisis and help prevent a a prevent help and crisis current the from very

sanctions can be imposed if needed. needed. if imposed be can sanctions changes will support our economies in the reco- the in economies our support will changes A short guide short A

have committed themselves to achieve, and and achieve, to themselves committed have their economic and budgetary policies. These These policies. budgetary and economic their Bulgaria

Italy

the budget targets which all euro area countries countries area euro all which targets budget the through which euro area countries coordinate coordinate countries area euro which through

Spain

Romania

in place to check that countries will indeed meet meet indeed will countries that check to place in EU has strengthened the rules and procedures procedures and rules the strengthened has EU Croatia

Slovenia countries. Rigorous surveillance mechanisms are are mechanisms surveillance Rigorous countries. nating economic policies in EMU. In response, the the response, In EMU. in policies economic nating Hungary Portugal

Austria

France scrutiny by the Commission and other euro area area euro other and Commission the by scrutiny vealed weaknesses in the framework for coordi- for framework the in weaknesses vealed Slovakia

Luxembourg

adopted the euro the adopted as a result of the economic crisis. Governments Governments crisis. economic the of result a as Germany

Belgium

EU Member States that have not yet yet not have that States Member EU Poland

Bumps along the road the along Bumps

This pact has been considerably strengthened strengthened considerably been has pact This

Netherlands

EU Member States with an opt-out an with States Member EU Lithuania

The The Kingdom

Euro area area Euro Latvia

United United

Denmark

Estonia Ireland

the euro the

Sweden

adopting & governing & adopting Finland Rules of the game : : game the of Rules KC-06-14-059-EN-N

About the euro Weighing up the beneﬁts Euro myths : think again

Financial Aﬀairs Financial

doi:10.2765/10919

Economic and and Economic

ISBN 978-92-79-43088-6 ISBN

Growth Pact. Pact. Growth

through a framework known as the Stability and and Stability the as known framework a through

commitment to sound ﬁscal policies is monitored monitored is policies ﬁscal sound to commitment

to keep public debt at sustainable levels. This This levels. sustainable at debt public keep to

to avoid large and excessive budget deﬁcits and and deﬁcits budget excessive and large avoid to

since the outset, has come with a ﬁrm obligation obligation ﬁrm a with come has outset, the since

www.ecb.eu

of the decisions are made. ECOFIN is comprised comprised is ECOFIN made. are decisions the of euro the in policy monetary on decisions makes

The European Central Bank : Bank Central European The

the euro area area euro the These are the Council meetings where the bulk bulk the where meetings Council the are These which institution EU independent an is ECB The

as to make a success of being in in being of success a make to as www.ec.europa.eu

Ensuring sound public ﬁnances so so ﬁnances public sound Ensuring Eurogroup the and ECOFIN (ECB) Bank Central European The European Commission : Commission European The

www.ec.europa.eu/economy_ﬁnance/index_en.htm

www.ec.europa.eu/euro

The euro : euro The

deﬁcit and public debt. They also seek to ensure ensure to seek also They debt. public and deﬁcit petitiveness and promote growth as well as jobs. jobs. as well as growth promote and petitiveness

New surveillance instruments have also been been also have instruments surveillance New entry or convergence criteria examine whether whether examine criteria convergence or entry

ready to have the euro as their currency. These These currency. their as euro the have to ready sely monitoring ﬁnancial market developments. developments. market ﬁnancial monitoring sely

Who’s who? who? Who’s

All EU countries are eligible to join the euro. Coun- euro. the join to eligible are countries EU All having a thriving economy in the euro area. The The area. euro the in economy thriving a having

Sound public ﬁnances are not the only key to to key only the not are ﬁnances public Sound

to the euro the to Joining the club the Joining

promoting growth promoting Cyprus

Ensuring competitiveness and and competitiveness Ensuring

Malta

Greece reoccurance of similar crises in the future. future. the in crises similar of reoccurance

very from the current crisis and help prevent a a prevent help and crisis current the from very

sanctions can be imposed if needed. needed. if imposed be can sanctions changes will support our economies in the reco- the in economies our support will changes A short guide short A

have committed themselves to achieve, and and achieve, to themselves committed have their economic and budgetary policies. These These policies. budgetary and economic their Bulgaria

Italy

the budget targets which all euro area countries countries area euro all which targets budget the through which euro area countries coordinate coordinate countries area euro which through

Spain

Romania

in place to check that countries will indeed meet meet indeed will countries that check to place in EU has strengthened the rules and procedures procedures and rules the strengthened has EU Croatia

Slovenia

Austria

France scrutiny by the Commission and other euro area area euro other and Commission the by scrutiny vealed weaknesses in the framework for coordi- for framework the in weaknesses vealed Slovakia

Luxembourg

adopted the euro the adopted as a result of the economic crisis. Governments Governments crisis. economic the of result a as Germany

Belgium

EU Member States that have not yet yet not have that States Member EU Poland

Bumps along the road the along Bumps

This pact has been considerably strengthened strengthened considerably been has pact This

Netherlands

EU Member States with an opt-out an with States Member EU Lithuania

The The Kingdom

Euro area area Euro Latvia

United United

Denmark

Estonia Ireland

the euro the

Sweden

adopting & governing & adopting Finland Rules of the game : : game the of Rules KC-06-14-059-EN-N

About the euro Weighing up the beneﬁts Euro myths : think again

Financial Aﬀairs Financial

doi:10.2765/10919

Economic and and Economic

ISBN 978-92-79-43088-6 ISBN

Growth Pact. Pact. Growth

through a framework known as the Stability and and Stability the as known framework a through

commitment to sound ﬁscal policies is monitored monitored is policies ﬁscal sound to commitment

to keep public debt at sustainable levels. This This levels. sustainable at debt public keep to

to avoid large and excessive budget deﬁcits and and deﬁcits budget excessive and large avoid to

since the outset, has come with a ﬁrm obligation obligation ﬁrm a with come has outset, the since

www.ecb.eu

of the decisions are made. ECOFIN is comprised comprised is ECOFIN made. are decisions the of euro the in policy monetary on decisions makes

The European Central Bank : Bank Central European The

the euro area area euro the These are the Council meetings where the bulk bulk the where meetings Council the are These which institution EU independent an is ECB The

as to make a success of being in in being of success a make to as www.ec.europa.eu

Ensuring sound public ﬁnances so so ﬁnances public sound Ensuring Eurogroup the and ECOFIN (ECB) Bank Central European The European Commission : Commission European The

www.ec.europa.eu/economy_ﬁnance/index_en.htm

www.ec.europa.eu/euro

The euro : euro The

deﬁcit and public debt. They also seek to ensure ensure to seek also They debt. public and deﬁcit petitiveness and promote growth as well as jobs. jobs. as well as growth promote and petitiveness

New surveillance instruments have also been been also have instruments surveillance New entry or convergence criteria examine whether whether examine criteria convergence or entry

ready to have the euro as their currency. These These currency. their as euro the have to ready sely monitoring ﬁnancial market developments. developments. market ﬁnancial monitoring sely

All EU countries are eligible to join the euro. Coun- euro. the join to eligible are countries EU All having a thriving economy in the euro area. The The area. euro the in economy thriving a having

Sound public ﬁnances are not the only key to to key only the not are ﬁnances public Sound

to the euro the to Joining the club the Joining

promoting growth promoting Cyprus

Ensuring competitiveness and and competitiveness Ensuring

Malta

Greece reoccurance of similar crises in the future. future. the in crises similar of reoccurance

very from the current crisis and help prevent a a prevent help and crisis current the from very

sanctions can be imposed if needed. needed. if imposed be can sanctions changes will support our economies in the reco- the in economies our support will changes A short guide short A

have committed themselves to achieve, and and achieve, to themselves committed have their economic and budgetary policies. These These policies. budgetary and economic their Bulgaria

Italy

the budget targets which all euro area countries countries area euro all which targets budget the through which euro area countries coordinate coordinate countries area euro which through

Spain

Romania

in place to check that countries will indeed meet meet indeed will countries that check to place in EU has strengthened the rules and procedures procedures and rules the strengthened has EU Croatia

Austria

France scrutiny by the Commission and other euro area area euro other and Commission the by scrutiny vealed weaknesses in the framework for coordi- for framework the in weaknesses vealed Slovakia

Luxembourg

adopted the euro the adopted as a result of the economic crisis. Governments Governments crisis. economic the of result a as Germany

Belgium

EU Member States that have not yet yet not have that States Member EU Poland

Bumps along the road the along Bumps

This pact has been considerably strengthened strengthened considerably been has pact This

Netherlands

EU Member States with an opt-out an with States Member EU Lithuania

The The Kingdom

Euro area area Euro Latvia

United United

Denmark

Estonia Ireland

the euro the

Sweden

adopting & governing & adopting Finland Rules of the game : : game the of Rules KC-06-14-059-EN-N

About the euro Weighing up the beneﬁts Euro myths : think again

Finland Sweden Ireland Denmark Estonia United Latvia Euro area Kingdom The Netherlands Lithuania EU Member States with an opt-out Belgium Poland EU Member States that have not yet Germany adopted the euro Luxembourg Czech Rep. France Austria Slovakia Portugal Slovenia Hungary Croatia Spain Romania

Italy Bulgaria

Greece Malta Cyprus

For more info

The euro : www.ec.europa.eu/euro European Commission Directorate-General for Economic and Financial Affairs : www.ec.europa.eu/economy_finance/index_en.htm The European Commission : www.ec.europa.eu The European Central Bank : www.ecb.eu © European Union, 2015 Reproduction is authorised provided the source is acknowledged.

ISBN 978-92-79-43088-6 doi:10.2765/10919 Towards a common currency: the euro journey 1957

Preparing the future of our common market The foundation of the European Economic Community back in 1957 saw the birth of a common market and the beginning of European integration. It allowed for goods, people, services and capital to move ever more freely between Member States, without barriers. 1992

The common market becomes a reality As exchange and movement across Europe became more common, it became clear that the single market was restricted by the many currencies in circulation. How could we break this additional barrier to integration? In 1992, the Maastricht Treaty decided that Europe would have a strong and stable single currency for the 21st century. 2002

The euro comes to life On 1 January 2002, euro banknotes and coins entered our bank tills, cash registers, purses and pockets. Since then, the euro area has grown, bringing tangible beneﬁts to an ever-increasing number of citizens and businesses.

The enlargement of the euro area is an ongoing and dynamic process.

TODAY

Keeping the euro on track There have always been criteria and rules in place to bring stability and harmony to the euro area economy. However, in response to some weak spots highlighted during the crisis, they have been strengthened to form the new EU economic governance framework which enforces the rules to help struggling euro area countries get back on track and avoid similar problems in the future.

Economic and Financial Aﬀairs