The new settlement currency, the euro, was first introduced in 1999. Already on 01.01.2002, this means of payment was issued in cash in the form of appropriate coins and banknotes. Today, the euro area includes countries such as Austria and Belgium, Germany and Greece, Ireland and Spain, Italy and Cyprus, Luxembourg and Malta, the Netherlands and Portugal, Slovakia and Slovenia, France, Finland and Estonia. In the territory of these 17 states, a single currency is in circulation.
Euro value
The main task of the European Union is the creation of a single economic space , which is able to provide some financial support between its member states. To achieve this goal, the euro zone was created.
Desire for integration
The euro currency zone was the grandest project of the 20th century. Moreover, the implementation of the plan, without any doubt, had global political and economic consequences, becoming one of the most difficult stages of the integration process in Western Europe.
A single domestic market has existed in the EU since 1993. However, its functioning could not be successful. The fact is that at that time the EU countries had their own national monetary systems, which differed from each other in fluctuations in exchange rates, taxes and price levels. In this situation, full economic integration could not even be discussed. To eliminate all these obstacles, the euro zone was created. At the same time, the economy of all the countries included in it has become much more profitable thanks to the free movement of services, goods, capital, and, of course, labor.
A single budget discipline has become a more progressive direction at the macroeconomic level. EU countries have combined their money markets under the supervision and guidance of supranational financial institutions. This made it possible to more reliably deal with inflationary processes, reduce tax payments and interest rates. This process contributed to the growth of employment and production, and also became the basis for the stability of public funds.
The role of the euro zone is also great for all business entities. After all, the single currency and monetary policy that exists on the territory of EMU means for companies a reduction in financial and price risks, as well as costs of settlement services. With the advent of the euro, a single monetary regulation began to be implemented for all countries of the monetary union. This has led to a decrease in the need for working capital.
The history of the union of European monetary systems
Is the idea of creating a euro really young? Not at all. Attempts to unify the monetary systems of various states were made back in the days when the first coins appeared. So, monetary unions were concluded between the ancient Greek city-states. The coins they issued circulated freely throughout the country.
The largest attempt to create a common monetary system is the organization of a trade and political association of the Baltic cities. In the 13-16th centuries. they were in the Hanseatic League. In different periods from 70 to 170 subjects participated in this community.
Attempts to unite several monetary systems into one continued in the future. So, in the 1st half of the 19th century. A number of projects were implemented to integrate various monetary systems in the framework of existing or newly created countries.
In the 2nd half of the 19th century. Latin and Scandinavian monetary unions arose in Europe. Within their borders, money circulation began to be carried out on a completely different basis.
The prototype of the euro area is considered the Latin Coin Union, created in December 1865 by countries such as France and Italy, Belgium and Switzerland. After the war with Napoleon, the monetary systems of these states were similar to each other. Three years later, Greece also entered the Latin Union.
Prerequisites for the creation of the European Union
Integration processes between states significantly accelerated their pace at the end of World War II. It was her lessons and enormous destructive consequences that allowed to revive the understanding of preventing the growth of nationalism in Europe. Another prerequisite for accelerating the integration process was the desire of states to strengthen their shaky economic positions. The restoration of its own international authority and political position was sought primarily by defeated Germany. In addition, the countries of Western Europe wanted to unite to deter the world influence of the USSR.
The origins of the integration process
How did the unification of Europe begin? The starting point of the integration process is the declaration of the French Foreign Minister Robert Schumann. This document, published on 05/09/1950, contained a proposal for the establishment of the EUSC (European Coal and Steel Association). This agreement was signed by Germany, France, Belgium, Italy, Luxembourg and the Netherlands. The integration of this sector, which is important for the economy, opened up prospects for the further development of this process in other areas.
At the next stages, the European Economic Community was established (03/25/1957), as well as the European Atomic Energy Community.
Documents governing the circulation of a single currency
In 1962, the EU issued a memorandum which first spoke of the importance of creating a unified European financial policy. This was the idea of a “currency snake”, which was a fixation of exchange rates in all countries, held back within certain boundaries. However, soon this plan could not be implemented. The reason was the energy crisis of 1972, during which oil prices rose significantly.
The prototype of the euro was introduced only in 1979. It was then that between the Central Banks of the EU an agreement was signed on the limit borders of fluctuations in exchange rates. Subsequently, the idea of creating the eurozone was developed in the Maastricht Treaty (1992) and the Single European Act (1986). These documents determined the basis for the emergence of a single currency, the schedule for its introduction, as well as the rules in the field of the state budget of the members of the newly created union.
Stability criteria
How can a state enter the eurozone? To do this, it must meet the following criteria:
- differ in exchange rate stability;
- have a certain price level;
- have a viable financial system.
Why is the euro zone so demanding on its members? Compliance with the above criteria will allow any country not only to use the achievements of a common economic space for all, but also to bring a certain amount of positive contribution to it. Only in this case, the euro area is able to get a balanced development of its economic sphere. All these stringent criteria of stability were enshrined in the Maastricht Accords.
Establishment of a financial institution
Who is involved in the administration of the euro? This function is endowed with the European Monetary Institute, which is located in Frankfurt. The document on the establishment of this institution was signed in 1994. At that time, the European Monetary Institute was called upon to lead the euro creation project and monitor the economic processes taking place in the EU countries.
The transition to a single currency was officially announced at a summit held in Madrid at the end of 1995. Then, new banknotes got their name - “Euro”.
The emergence of a new currency
Countries in the euro area began to use the new currency from 01.01.2002. It was on this day that Belgian and French francs, Irish pounds, Finnish and German marks, Spanish pesetas and Italian lira, Austrian shillings, Portuguese escudos were withdrawn from circulation. and Dutch guilders.
But these states were not limited to the euro zone. The countries of Europe, not included in the initial list, constantly sought to raise their economic indicators. So, to meet the necessary criteria only since 2006 became Slovenia. Since this period, it has also entered the eurozone. From 01.01.2008, Cyprus and Malta appeared on the list, and from 2009 - Slovakia.
Settlement system
The most important element that the euro area has is the Trans-European Automatic System. It allows all business entities to make payments online. The work of this system began to be carried out simultaneously with the introduction of the euro. This has significantly reduced the time required for the passage of payments between entities of different countries.
The economic impact of the new currency
The euro zone created in the EU has given its member countries significant weight in the global market. And all this is due to the fact that the total share of goods produced in the countries of the European Union is equal to one third of the total world volume. And for companies cooperating with the EU, the advent of the euro made it possible to work in a single currency zone, which reduced their costs of making payment transactions when trading in services and goods.
The new currency allowed the formation of a single, larger capital market. That is why the euro is less affected by fluctuations in the dollar than any national currency. All this has become a prerequisite for the reorientation of the international capital flow.
Today's problems
There are seven economies in the eurozone that are experiencing significant difficulties. They can be observed in countries such as Ireland and Greece, Spain and Portugal, Slovenia, Cyprus and Italy. All of the above states have many private and public debts.
What else is the euro zone currently facing? The problems of this economic territory are also associated with the imbalance of cash flows, loss and lack of competitiveness and recession. All this is reflected in the growing deficit of trade balances.
The biggest problem in the eurozone is recession. This process is gradually penetrating into the most economically developed countries of Europe. For example, France is on the verge of a recession. Germany is also experiencing a sharp slowdown in economic growth.
Fan zones
Despite economic difficulties, sports interaction between European countries does not cease. In countries located on the European continent, there are numerous matches for football and hockey. For the convenience of fans, a so-called fan zone is created. Euro 2016, for example, at such venues could see hundreds of football fans.
At the same time, for those who were in the fan zone, various master classes were held, meetings were held with various celebrities, training in the “football” language was conducted, etc.