Euro Area 2009

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Toward s E c o n

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1999 e euro - general information

“EU citizens and residents have selected a design for istory was made on 1 January 1999 when the commemorative €2 coin to celebrate 10 years H of Economic and Monetary Union. e winning eleven European Union countries (later to design was created by George Stamatopoulos. Commemorative coins bearing this design will be become sixteen) irrevocably established the issued by all euro-area Member States, starting in January 2009.” www.eurodesigncontest.eu conversion rates between their respective national currencies and the euro and created a monetary union with a single currency, giving birth to the euro.

2001 �� EMU@10 – Ten years ago, the Council in the composition of Heads of State and Governments decided on the Member States participating in the euro.

A transitional period followed where the euro only existed as book money, and on 1 January 2002, euro banknotes and coins were put into circulation. Euro area 2009

Twelve countries (Belgium, Finland Germany, Greece, Spain, France, Ireland, Sweden Italy, Luxembourg, the Netherlands, Estonia Austria, Portugal and Finland) started 2007 Latvia using euro banknotes and coins when Ireland Denmark United Lithuania Euro area they first entered circulation on 1 Kingdom January 2002. e EU Member States that have not yet Netherlands Poland adopted the euro Belgium Germany EU Member In 2007, Slovenia was the first of the 10 States with an Luxembourg Czech Rep. opt-out countries that joined the EU in 2004 to Slovakia France join the euro area. In 2008, Cyprus and Austria Hungary Malta joined the euro area, followed by Slovenia Romania Slovakia on 1 January 2009. Portugal Italy Bulgaria Spain

Greece Cyprus Malta

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e European Commission proposes Community (or EU) e key players 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.

e 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 and economic affairs gather as theECOFIN Council, which constitutes the forum for the coordination of national policies. Summit meetings of Heads of State or Government, known as the European Council, set the overall political direction for European decision-making.

e Eurogroup is an informal body composed of the finance ministers of euro area Member States and the European Commission. e ECB also participates in Eurogroup meetings e European Parliament, whose by invitation. e Eurogroup members are directly elected, is discusses topics of common interest e European Central Bank (ECB) consulted on legislative proposals, for all euro area Member States, is the keystone in the European and in many areas also shares the like the economic situation or System of Central Banks (ESCB), power to adopt legislation with the exchange rate developments. Since comprising the national central Council of the European Union. January 2005 Luxembourg‘s Prime banks of all EU Member States. ECON is the European Parliament‘s Minister Jean-Claude Juncker is the e national central banks of the standing committee on economic first permanent President of the euro area plus the ECB make up the and monetary affairs. Eurogroup. Eurosystem. e 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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Monetary policy concerns the management of the e key policies supply of money in an economy, for example by printing money or setting interest rates. e 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 EU level, notably through the Stability and Growth Pact.

e responsibility for euro area Exchange rate policy economic policy remains e European Central Bank is in charge of largely with the Member conducting foreign exchange operations and States, although the EC Treaty managing the euro area’s requires them to coordinate exchange reserves. their economic policymaking with e Council has the a view to achieving the objectives of right to conclude the Community. is coordination is ensured through the formal exchange rate Commission and the ECOFIN Council. agreements or to give general orientations for exchange rate policies.

e Lisbon Strategy – also called the Growth and Jobs Initiative – adopted by the EU in 2000 and revamped in 2005, aims for an innovation-friendly, modern Europe 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. e broader objectives set out by the Lisbon Strategy are intended to be attained by 2010. e main fields are economic, social, and environmental renewal and sustainability. e Lisbon Strategy is heavily based on the economic concepts of: • Innovation as the motor for economic change • e “learning economy” • Social and environmental renewal e 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 e young have little pocket money. ey 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 same music – on the radio or record player. Boys hair is worn longer as young people begin to have short hair, girls have medium to long hair – dress very differently from adults. e word styled like their mothers. denim comes from ‘de Nîmes’, or ‘from Nîmes’ – the French town where the material was produced in the 17th century.

1961 e first man in space is Yuri Gagarin. © Getty Images

Economic and monetary union

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

History and politics

1957 e six founding members of the European 1960s e common Agricultural Policy is Union each have their own currency: Belgium (Belgian adopted to ensure secure and stable food franc), Germany (mark), France (French franc), Italy supplies by supporting producers in the (lira), Luxembourg (Luxembourg franc), and the agricultural sector. 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 e European Space Agency (ESA) is formed to 1980s Pop stars with flared trousers, platform conduct independent space missions. Ariane 1, the first shoes and long hair are a big influence on fashion. Girls ESA rocket, is launched on Christmas Eve 1979 with a wear “hot pants”, and punks – with their spiky dyed payload of communications satellites. hair and craze for body piercing – make their first appearance.

Economic and monetary union

1972 Adopting an exchange rate mechanism 1979 e European Monetary System was (ERM) called “the snake in the tunnel”, the Member created to limit fluctuations between European States fix their currencies against the US dollar currencies. e ECU (European Currency Unit) to reduce exchange rate volatility and thereby to was created as a unit of account. improve economic stability and give a new impetus to EMU. However, the snake is soon abandoned following the economic disruption caused by the oil crisis.

History and politics 1973 Denmark, Ireland and the United Kingdom 1987 On the initiative of Jacques Delors, the join the European Community, adding the Danish Single European Act enters into force, preparing krone, the punt and the pound sterling to the the ground for the free movement of goods, currency basket. Political turmoil in the Middle East sparks services, capital and people. e deadline for the first oil crisis, causing worldwide economic and social completion of the single market is set at 1992. disruption.

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Re-establishing economic stability

Culture and society

1989 Tim Berners-Lee, a scientist working at the European Organisation for Nuclear Research (CERN), invents the World Wide Web (www), a system for finding and sharing information across the Internet.

Economic and monetary union

1989 In Madrid, European leaders agree to 1991 e 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 with a European Central Bank to manage the single Maastricht Treaty (Treaty on European Union), currency. signed in 1992, which set out the blueprint for EMU. ey place economic constraints on governments in order to ensure sufficient economic convergence is achieved before establishing (and subsequently enlarging) the single European currency area.

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 EC). its membership to 12 and adding the peseta and e ancient drachma lives on today in its “Athenian the escudo to the growing currency basket. owl” symbol which features on one-euro coins.

Signature of the Act of accession of Spain to the 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

1997 Low-cost airlines bring frequent air travel within the reach of many more people boosting tourism and travel throughout Europe.

Economic and monetary union

1995 e European Council meeting in 1998 e independent European Madrid announces the name of the future Central Bank is founded in European single currency – the euro – to Frankfurt. be launched on 1 January 1999.

History and politics 1989 Soviet President Mikhail Gorbachev helps 1995 Austria, Finland and Sweden join the EU 1999 e Schengen area, abolishing remove the barriers that divide Europe. e Iron – bringing its membership to 15 and adding the border controls among its members and Curtain is drawn back as Hungary opens its borders schilling, the markka and the krona to the first agreed in the Luxembourg town to Austria and the Berlin Wall comes down reuniting growing currency basket. of Schengen in 1985, is extended to 13 Europe. countries in the Treaty of 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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e largest monetary changeover in history

Culture and society 2000 e EU and ESA launch a European 2000s Home computers run at gigahertz (GHz) Space Strategy for the exploration and the speeds and fast broadband internet connections exploitation 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.

Economic and monetary union 1999 e euro is launched in 11 2004 e new Member States are to 2008 Cyprus and Malta join EU Member States forming the euro adopt the euro as soon as they meet the the euro area. area. It takes over the role of the ECU Maastricht convergence criteria. For these (European Currency Unit). e ECU countries, the single currency is “part of the 2009 EMU celebrates its first was a composition of the different package” of the European Union. 10 years. Slovakia joins the national currencies. Euro banknotes euro area as the 16th member Slovenia is the first of the new EU and coins are not available yet – 2007 country. euro cash is only introduced three Member States to adopt the euro. years later. Denmark and the United Kingdom have special derogations in the original Maastricht Treaty on European Union. Neither country is legally required to join the 2002 A new year and a new currency. euro area. Greece joins e largest cash changeover in history the euro area in 2001. takes place as euro coins and banknotes replace the national currencies of the euro area. e new euro is the crowning achievement of decades of work towards EMU. History and politics 2004 e European Union now numbers 25, welcoming 2007 Bulgaria (lev) and Romania (leu) join the the Czech Republic (Czech koruna), Estonia (kroon), European Union. Cyprus (Cyprus pound), Latvia (lats), Lithuania (litas), On 21 December 2007, the Schengen area is enlarged Hungary (forint), Malta (Maltese lira), Poland (zloty), to Hungary, Poland, Slovakia, e Czech Republic, Slovenia (tolar) and Slovakia (Slovak koruna). Lithuania, Latvia, Estonia, Malta and Slovenia making its eastern border 4278 km long.