European monetary union

1. ECONOMIC AND MONETARY
UNION
By
TEJASWINI(13031E0005)
K.SHEKHAR(13031E0016)

2. ECONOMIC AND MONETARY UNION
 Economic and Monetary Union (EMU) represents a
major step in the integration of EU economies. It
involves the coordination of economic and fiscal
policies, a common monetary policy, and a common
currency, the euro.

3. ECONOMIC AND MONETARY UNION
 The European Monetary System (EMS) was the
pioneer of Economic and Monetary Union(EMU),
which led to the establishment of the Euro. It was a
way of creating an area of currency stability
throughout the European Community by
encouraging countries to co-ordinate their monetary
policies.

4. WHEN EMU STARTED?
 The decision to form an Economic and Monetary
Union was taken by the European Council in the
Dutch city of Maastricht in December 1991
 The Treaty of Maastricht laid down a set of criteria
to be met by member states if they were to qualify
for the EMU

5. CRITERIA
 Curbing inflation
 Cutting interest rates
 Reducing budget deficits to a maximum of 3% of
GDP
 Limiting public borrowing
 Stabilising the currency’s exchange rate

6. THREE STAGE PROCESS
 The Maastricht Treaty laid down the three-stage
process in which EMU was established.
First stage (1st Jul 1990)
Second stage(1st Jan 1994)
Third stage(1st Jan 1999)

7. STAGE ONE OF EMU
 Complete freedom for capital transactions
 Increased co-operation between central banks
 Free use of the ECU (European Currency Unit,
forerunner of the €)
 Improvement of economic convergence

8. SECOND STAGE OF EMU
 Establishment of the European Monetary Institute
(EMI)
 Ban on the granting of central bank credit
 Increased co-ordination of monetary policies
 Strengthening of economic convergence
 Process leading to the independence of the
national central banks, to be completed at the latest
by the date of establishment of the European
System of Central Banks;

9. THIRD STAGE OF EMU
 Irrevocable fixing of conversion rates
 Introduction of the euro
 Conduct of the single monetary policy by the
European System of Central Banks
 Entry into effect of the intra-EU exchange rate
mechanism (ERM II)
 Entry into force of the Stability and Growth Pact

10. WHO DOES WHAT IN EMU?
 The management of Economic and Monetary Union
involves many actors with different responsibilities.
As well as the governments and central banks of
the Member States, the Council, the European
Commission, the European Parliament and the
European Central Bank all have roles to fulfill. The
management of EMU involves three main areas of
macroeconomic policy-making: monetary policy,
fiscal policy and economic policy coordination.

11. THE EURO ZONE

12. SOURCE
 European Central Bank
 Wikipedia