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The - 1999 general information

History was made on 1 January 1999 when eleven countries (later to become thirteen) irrevocably established the conversion rates between their respective national and the euro and created a monetary union with a single , giving birth to the euro. 2001 A transitional period followed where the euro only existed as book money, and on 1 January 2002, euro and were put into circulation. Twelve countries (, , , , , Ireland, , , the , , and ) started using and coins when they first entered circulation on 1 January 2002.

The three steps of In 2007, was the first of the ten enlargement: 1999, 2001 countries that joined the EU in 2004 to join and 2007 the euro area. 2007 Euro area Within the euro area, there is one institution, EU Member States with an opt-out the European , which is in EU Member States that have not yet adopted the euro charge of conducting monetary policy with a view to ensuring price stability. Member States continue to be in charge of their economic policies but must coordinate them to ensure that Economic and Monetary Union functions smoothly.

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The key players The proposes Community (or EU) policies and legislation and monitors their implementation. Proposals relating to Economic and Monetary Union (EMU) are prepared by the European Commission’s Directorate-General for Economic and Financial Affairs, under the responsibility of the Commissioner for Economic and Monetary Affairs, Joaquín Almunia. The Council of the European Union (“the Council”), which is made up of representatives of EU Member States' governments, decides on and adopts Commission proposals. When matters relating to EMU (with the exception of monetary policy) are under discussion, the national ministers of finance © Segno Associati and economic affairs gather as the ECOFIN Council, which constitutes the forum for the coordination of national policies. Summit meetings of Heads of State or Government, known as the , set the overall political direction for European decision-making.

The is an informal body composed of the finance ministers of euro area Member States and the European Commission. The ECB also The , whose © Segno Associati participates in Eurogroup meetings by members are directly elected, is invitation. The Eurogroup discusses consulted on legislative proposals, and The (ECB) is topics of common interest for all euro in many areas also shares the power to the keystone in the European System of area Member States, like the economic adopt legislation with the Council of Central Banks (ESCB), comprising the situation or developments. the European Union. ECON is the national central banks of all EU Member European Parliament's standing States. The national central banks of the committee on economic and monetary euro area plus the ECB make up the affairs. . The ECB is independent of political influence and conducts the monetary policy of the euro area with a mission to maintain price stability.

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The key policies Monetary policy concerns the management of the supply of money in an economy, for example by printing money or setting interest rates. The ECB is in charge of drawing up and implementing the monetary policy of the euro area.

Fiscal policy concerns the management of government revenues (e.g. taxation) and expenditure (e.g. spending on healthcare). Sound public finances are particularly important for the smooth working of EMU. Fiscal policies remain the responsibility of the Member States but are coordinated at The responsibility for euro area economic policy remains EU level, notably through the Stability and Growth Pact. largely with the Member States, although the EC Treaty requires them to coordinate their economic policymaking with a view Exchange rate policy to achieving the objectives of the Community. This The European Central Bank is in charge coordination is ensured through the Commission and the of conducting foreign exchange ECOFIN Council. There are a number of structures and operations and managing the euro area’s instruments that underpin coordination such as the exchange reserves. The Council has the Eurogroup, the Stability and Growth Pact and the Integrated right to conclude formal exchange rate Guidelines. agreements or to give general orientations for exchange rate policies.

The – also called the Growth and Jobs Initiative – adopted by the EU in 2000 and revamped in 2005 – aims for an innovation-friendly, modern which creates growth and jobs for its citizens through the formulation of various policy initiatives to be taken by all EU Member States and by the EU itself. The broader objectives set out by the Lisbon Strategy are intended to be attained by 2010. The main fields are economic, social, and environmental renewal and sustainability. The Lisbon Strategy is heavily based on the economic concepts of: • Innovation as the motor for economic change • The “learning economy” • Social and environmental renewal The rationale of the strategy is to create a stronger economy that will drive job creation in the EU, alongside social and environmental policies that ensure sustainable development and social inclusion, which will themselves drive economic growth even further.

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First steps towards a European economic and monetary union

Culture and society

1950s The young have little pocket money. They 1960s Blue denim jeans appear as fashion tend to dress like their parents and listen to the wear. Later, the first miniskirts are seen and hair same music – on the radio or record player. Boys is worn longer as young people begin to dress have short hair, girls have medium to long hair – very differently from adults. The word denim styled like their mothers. comes from “de Nîmes”, or “from Nîmes” – the French town where the material was produced in the 17th century.

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1961 The first man in space is Yuri Gagarin.

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Economic and monetary union

1957 The founding treaty of the EU, the Treaty 1970 The Prime Minister of Luxembourg, Pierre of Rome, identifies the convergence of economic Werner, proposes a three-stage process towards policies as an important contribution to promoting EMU and a single currency at a summit meeting stability, a rising standard of living and closer in The Hague. The Member States adopt the relations between the Member States. Werner Plan in 1971, which foresaw the creation of a monetary union by 1980.

History and politics

1957 The six founding members of the European 1960s The Common Agricultural Policy is Union each have their own currency: Belgium adopted to ensure secure and stable food supplies (Belgian ), Germany (mark), France (French by supporting producers in the agricultural sector. franc), Italy (), Luxembourg (), and the Netherlands (guilder).

Sicco Mansholt, Vice-President of the Commission of the European Economic Community in charge of Agriculture, considered as father of the Common Agricultural Policy

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Instability and economic disruption

Culture and society

1975 The European Space Agency (ESA) is formed 1980s Pop stars with flared trousers, platform to conduct independent space missions. Ariane 1, shoes and long hair are a big influence on fashion. the first ESA rocket, is launched on Christmas Eve Girls wear “hot pants”, and punks – with their spiky 1979 with a payload of communications satellites. dyed hair and craze for body piercing – make their first appearance.

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© ESA

Economic and monetary union

1972 Adopting an exchange rate mechanism 1979 The was (ERM) called “the ”, the Member created to limit fluctuations between European States fix their currencies against the US dollar to currencies. The ECU () reduce exchange rate volatility and thereby to was created as a . improve economic stability and give a new impetus to EMU. However, the snake is soon abandoned

following the economic disruption caused by the © Segno Associati oil crisis.

History and politics

1973 , Ireland and the 1987 On the initiative of Jacques Delors, the join the European Community, adding the Danish enters into force, preparing , the punt and the to the the ground for the free movement of goods, . Political turmoil in the Middle East services, capital and people. The deadline for sparks the first oil crisis, causing worldwide completion of the single market is set at 1992. economic and social disruption.

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Re-establishing economic stability

Culture and society

1980s Jeans, trainers and T-shirts are in all 1989 Tim Berners-Lee, a scientist working at the teenagers’ wardrobes. Girls start to show a little European Organisation for Nuclear Research midriff, body piercing is common and small tattoos (CERN), invents the World Wide Web, a system are popular. The young are more style-conscious for finding and sharing information across the than ever. internet.

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Talk Talk and Duran Duran pop music groups Economic and monetary union

1989 In Madrid, European leaders agree to 1991 The European Council adopts the President Delors’ three-stage timetable for the “Maastricht criteria” – the rules for adoption of introduction of economic and monetary union, the euro, so-called because it was the Maastricht with a European Central Bank to manage the single Treaty (), signed in 1992, currency. which set out the blueprint for EMU. They place economic constraints on governments in order to ensure sufficient economic convergence is achieved before establishing (and subsequently enlarging) the single European currency area. The Broad Economic Policy Guidelines (BEPGs) are adopted as a reference document guiding the conduct of the whole range of economic policies in the Member States and the European Union.

History and politics

1981 Greece and the drachma join the EU (at that 1986 Spain and Portugal join the EU – bringing time still known as the European Community or its membership to 12 and adding the peseta and EC). The ancient lives on today in the escudo to the growing currency basket. its “Athenian owl” symbol which features on Greek one . - Signature of the Act of accession of Spain to the © Segno Associati European Community by Felipe González (on the right), and Fernando Morán López (on the left)

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Emergence of the largest integrated trading bloc in the world

Culture and society

1990s Home computers run at several hundred 1997 Low-cost airlines bring frequent air travel MHz and dial-up internet connections are within the reach of many more people boosting spreading. E-mail becomes common and video tourism and travel throughout Europe. games take off. There are 24 million web servers worldwide by the end of the decade.

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Economic and monetary union

1995 The European Council meeting 1997 The Stability and Growth Pact in Madrid announces the name of the is agreed at the Amsterdam European future European single currency – the Council. euro – to be launched on 1 January 1999.

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1998 The independent European Central Bank is founded in Frankfurt.

History and politics

1989 Soviet President Mikhail Gorbachev helps 1995 Austria, Finland and join the EU 1999 The , abolishing border to remove the barriers that divide Europe. The Iron – bringing its membership to 15 and adding the controls among its members and first agreed in Curtain is drawn back as Hungary opens its borders schilling, the markka and the krona to the growing the Luxembourg town of Schengen in 1985, is to Austria and the Berlin Wall comes down currency basket. extended to 13 countries in the Treaty of reuniting Europe. Amsterdam. Much of the EU now has a single external border and people, including non-EU nationals, can move freely around the Schengen area.

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The largest monetary changeover in history

Culture and society

2000 The EU and ESA launch a European Space 2000s Home computers run at gigahertz (GHz) Strategy for the exploration and the exploitation speeds and fast broadband internet connections of space. are spreading throughout Europe. Mobile phones have more functions such as digital cameras, and are becoming fashion accessories. Digital MP3 music players with miniature hard disks can download music from the internet and store many thousands of tracks in a single handheld device – a lifetime’s high-sound-quality music in your pocket. © Segno Associati

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Economic and monetary union

1999 The euro is launched in 11 EU 2004 The new Member States are Member States forming the euro area. to adopt the euro as soon as they It takes over the role of the ECU meet the Maastricht convergence (European Currency Unit). The ECU criteria. For these countries, the single 2007 Slovenia is the first of the new was a composition of the different currency is “part of the package” of EU Member States to adopt the euro. national currencies, weighted European Union membership – unlike according to their part in EU external the UK and Denmark, they have no trade and their GDP (gross domestic possibility of “opting out". product). Euro banknotes and coins are not available yet – euro cash is only 2002 A new year and a new currency. introduced three years later. The largest cash changeover in history Denmark and the United Kingdom takes place as euro coins and have special derogations in the original banknotes replace the national on European Union. currencies of the euro area. The new Neither country is legally required to euro is the crowning achievement of join the euro area. Greece joins the decades of work towards EMU. euro area in 2001. History and politics © Segno Associati

2000 The Heads of State and 2004 The European Union now numbers 25, Government of the EU launch the welcoming the (), Lisbon Strategy – a series of ambitious (kroon), (Cyprus pound), reforms to make the European Union (lats), (litas), Hungary (forint), the most dynamic and competitive (), Poland (zloty), Slovenia knowledge-based economy in the (tolar) and (). world by 2010. 2001 A terrorist attack destroys the 2007 Bulgaria (lev) and Romania New York World Trade Center, (leu) join the European Union. bringing a change in stance towards international terrorism in the world and new challenges for European politics.

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