Entry Criteria to the Euro 1.Entry criteria The four entry criteria are set out in Article 121(1) of the EC Treaty. A Member State must satisfy all four criteria in order to be able to enter the euro area. (Treaty quotes Source: http://europa.eu.int/scadplus/leg/en/lvb/l25014.htm [02/02/2004]) 1.1. Price Stability The Treaty stipulates: "The achievement of a high degree of price stability [...] will be apparent from a rate of inflation which is close to that of, at most, the three best-performing Member States in terms of price stability." The inflation rate of a Member State must not exceed by more than 1.5% that of the three best-performing Member States in terms of price stability for a year preceding the test for criteria compliance. TEST PASSED ----------- 1.2. Government Finances The Treaty stipulates: "The sustainability of the government financial position [...] will be apparent from having achieved a government budgetary position without a deficit that is excessive [...]". This stipulation gave rise to two criteria being drawn up by the Commission for the Council of Finance Ministers. A. The annual government deficit must not exceed 3% of gross domestic product (GDP) at the end of the preceding financial year to the test for criteria compliance. B. Outstanding government debt must not exceed 60% of GDP at the end of the preceding financial year to the test for criteria compliance. TEST PASSED 1.3. Exchange Rates The Treaty stipulates: "the observance of the normal fluctuation margins provided for by the exchange-rate mechanism of the European Monetary System, for at least two years, without devaluing against the currency of any other Member State." A. The Member State must have controlled its exchange rate in line with the Euro within the normal margins of the exchange-rate mechanism, without any break during the two years preceding the test for criteria compliance. B. The Member State must not have devalued its currency against the Euro on its own initiative during the same period. The pound has been controlled in line with the normal margins of the ERM and there has been no devaluation in the last two years. TEST PASSED ----------- 1.4. Long-Term Interest Rates The Treaty stipulates: "the durability of convergence achieved by the Member State [...] being reflected in the long-term interest-rate levels". The nominal long-term interest rate must not exceed 2%of the three best-performing Member States in terms of price stability. The period taken into consideration is the year preceding the test for criteria compliance.
Said in Document B, it shows a graph of Greece, Portugal, Czech Republic, and Hungary. It displays their synthetic GDP and their GDP when they joined the EU. As for all instead of Greece, their money increased, but Greece decreased. Even though joining the EU may be a good advantage for a lot of money, it may be sometimes a bad idea, because, for instance, Greece started off with about 35 trillion dollars for their GDP per capita in 2010, but after they joined, their GDP went lower to 25 trillion dollars (Document B). If you now look at Poland, it’s not a strong country.
Prutha Patel Mr. Lougheed Social Studies 09 February, 2016 Has Europe United? Do you believe that the European Union has united Europe? A supranational cooperation is when countries give up some control of their affairs as they work together to achieve shared goals. The European countries have used supranational cooperation to create the European Union because they want to prevent future wars, and rebuild the weak economy that had formed after the two wars. The European Union has united Europe because it has made Europe have a common currency called the Euro, has a common “government” for the European Union, and has all of the countries influenced when one country that is part of the European Union is in “trouble”.
The European Union today is a political and economic entity that controls in a single market located mostly in Europe exploiting Euro as a single currency uniting the vast majority of its members. The market that all European Union members share provides free trade of goods and services as well as a common external tariff. One might argue that the European Union would not perceptible its current influence had it not been for the introduction of the Euro. Speaking of the benefits of the Euro, one can name the elimination of exchange rate problems, creation of a single financial market, providing price stability, low interest rates as well as being a political symbol of unity and commitment to the Union. Today, Euro is the second reserve currency in the entire world - a fact that clearly speaks for itself of its value in the global market.
Economic indicators often affect and influence the value of a country's currency. The Trade Deficit, the Gross National Product (GNP), Industrial Production, the Unemployment Rate, and Business Inventories are examples of economic indicators. We will be dealing with four specific indicators: interest rate, inflation, unemployment, and employment growth, as well as Real Gross Domestic Product (GDP). Real GDP is so called because the effects of inflation and depreciation are accounted for in the figures. The state of the economy is important both on a micro and macroeconomic level.
Many people would agree that Europe is a continent in which regions identify with each other even if they are not part of the same country. For that reason, as well as others, in 1957 the Treaty of Rome "declared a common European market as a European objective with the aim of increasing economic prosperity and contributing to 'an ever closer union among the peoples of Europe'" (www.euro.ecb.int). Later, in 1986 and then in 1992, the Single European Act and the Treaty of European Union tried to build on the previous treaty to create a system in Europe in which one currency could eventually be used all over the land under the heading of the Economic and Monetary Union. (www.euro.ecb.int) However, the question remains, why would the leaders of various European nations want to create one currency when the rights of national sovereignty have always been an issue for countries all over the world. Why, in 1998 did they create the European Central Bank, and why in "The third stage of EMU... on 1 January 1999, when the exchange rates of the participating currencies were irrevocably set" (www.euro.ecb.int) did eleven, and later twelve, countries link themselves economically in a way that has never been done before?
...actions. The countries that sign the convention are agreeing to create laws that will penalize anyone who bribes a foreign official. Currently, it is integrated by thirty-four countries, both members and non-members of the OECD. However, there have been many complaints about countries that have still yet to provide proof that they are in fact taking care of the corruption in their countries.
To most people in the United States hearing the word Euro brings about blank stares. Ask this same question in England or another European country and it means bringing Europe together under one common currency. The Euro can be defined as the common monetary system by which the participating members of the European Community will trade. Eleven countries Germany, France, Spain, Portugal, Ireland, Austria, the Netherlands, Belgium, Luxembourg, Finland and Italy will comprise the European Economic Monetary Union that will set a side their national currency and adopt the Euro in 2002. A new National bank, based in Frankfurt Germany, will be constructed and the interest rates that control the economies of these nations will be in the hands of this new system. It is indeed a great experiment, being masterminded in Frankfurt, one that will be felt through out Europe as well as the rest of the world.1
Following the post-World War II carnage and violence, a new Europe arose from the ashes. This new Europe was decimated from the intermittent fighting between the Allied and Axis powers during the second great war and the nations of Europe sought to devise a plan that to avoid further war-time conflicts within the region. The European Coal and Steel Committee was the first advent of assembling nations together in political and economic interest. The ECSC was formed in 1950 with the signing of the Treaty of Paris whose signatories included West Germany , Italy, Luxembourg, Belgium, France and The Netherlands.
The theme of this essay outlines two things. One, the key elements of Bretton woods system and second, the characterisation of Bretton woods system by Ruggie as ‘embedded liberalism’, and how far he succeeds in it. The Bretton woods system is widely referred to the international monetary regime, which prevailed from the end of the World War 2 until the early 1970s. After the end of the World War 2, the need of international monetary framework to boost trade and economic; growth and stability, was important. Taking its name from the site of the 1944 conference, attended by all forty-four allied nations; the Bretton Woods system consisted of four key elements. First, to make a system in which each member nation has to fix or peg his currency exchange rate against the gold or U.S. dollar, as the key currency. Secondly, the free exchange of currencies between countries at the established and fixed exchange rate; plus or minus a one-percent margin. Thirdly, to create an institutional forum, so-called International Monetary Fund (IMF), for the international co-operation on money matters: to set up, stabilize, and watch over exchange rates. Fourth, to remove all the existing exchange controls limiting (protectionism) policies by the members, on the use of its currency for international trade. In practice the first scheme, as well as its later development and final demise, were directly dependent on the preferences and policies of its most powerful member, the United States. According to John Gerard Ruggie, 1982, this Bretton woods system of monetary co-operation represented the type of liberalism which characterise “domestic social economic stability along with a liberal trading order.” He referred this system as ‘embed...
In order to be a member of the European Union, an applying nation must first meet the requirements of membership as described in the Copenhagen Criteria. There are geographic, democratic and economic criteria. Geographically, the applying nation must be classified as a European nation, as exemplified by Morocco’s rejection. The applying nation must also have a secure and functional democratic government that only acts in accordance with the law. This means that any citizen should be able participate in the political system and that there are free elections with a secret ballot. The government must also respect human rights and have protection policies for minorities, meaning that a persons’ inalienable rights are protected by law and minority groups can retain their culture and language without discrimination. Economically, a country must have a functional market economy on which it can feasibly support itself and other member nations if need be. The country’s economy needs to be able to compete on a global scale and deal with economic pressures. There are also separate guidelines for countries wanting to convert to the Euro. Finally, countries that want to join must agree to uphold laws and regulations t...
As a result of those huge economic and social issues resulting from Eurozone crisis, finding a solution to the currency problem become an urgent as well as a crucial task of the member countries. In order to fix this problem, there were many different proposals submitted by all parties concerned. Policy implementations taken by the European Central Bank have had some powerful impacts on the economy of the union, and therefore the idea concerning a separation within the union has almost disappeared. However, to be able to find an effective and permanent solution it is needed to focus on long term fiscal and monetary policies.[1]
Before the introduction of payment schemes the CAP established a price floor which was mainly enforced by tariffs. These tariffs- also called variable levies- where used to keep food prices within the EU above the price floor. The Price floor was set above the world price but below the equilibrium point in the market. This point is known as ‘self-sufficiency’ and at this point the EU would import no food. The tariff causes the price of food imports to increase to the initial price plus the value of the tariff. As a result of this EU farmers never have to except a price lower than the world price plus the value of the tariff. All domestic production is equal to the price floor and the level of import sis de-termined by the difference in consumption and production. The economic impact of having a price floor is as follows:
The enlargement of the European Union (EU) in 2004 and 2007 has been termed as the largest single expansion of the EU with a total of 12 new member states – bringing the number of members to 27 – and more than 77 million citizens joining the Commission (Murphy 2006, Neueder 2003, Ross 2011). A majority of the new member states in this enlargement are from the eastern part of the continent and were countries that had just emerged from communist economies (EC 2009, Ross 2011), although overall, the enlargement also saw new member states from very different economic, social and political compared to that of the old member states (EC 2009, Ross 2011). This enlargement was also a historical significance in European history, for it saw the reunification of Europe since the Cold War in a world of increasing globalization (EC 2009, Mulle et al. 2013, Ross 2011). For that, overall, this enlargement is considered by many to have been a great success for the EU and its citizens but it is not without its problems and challenges (EC 2009, Mulle et al. 2013, Ross 2011). This essay will thus examine the impact of the 2004/2007 enlargements from two perspectives: firstly, the impact of the enlargements on the EU as a whole, and thereafter, how the enlargements have affected the new member states that were acceded during the 2004/2007 periods. Included in the essay will be the extent of their integration into the EU and how being a part of the Commission has contributed to their development as nation states. Following that, this essay will then evaluate the overall success of the enlargement process and whether the EU or the new member states have both benefited from the accessions or whether the enlargement has only proven advantageous to one th...
The IMF was created at the end of WWII in order to create a framework for global economic cooperation without creating a second Great Depression. Since its creation it has evolved to tackle a variety of economic issues. The goal of the IMF is to help the governments of member countries “take advantage of the opportunities- and manage the challenges- posed by globalization and economic development more generally.” It tracks global economic trends and performance, alerts member countries of potential problems, provides of forum to discuss policy, and helps governments in times of economic hardship. It provides policy advice and financing to member countries suffering from economic adversity. Additionally, it aims to create...
Ferguson et al. International financial stability. Geneva: International Center for Monetary and Banking Studies, 2007. Print.