European monetary union For Ireland, the decision to join the European Monetary Union EMU was believed to be the most important and controversial economic and political challenge since independence. Despite the economists' worries about the future effects of the Euro on the Irish economy and the consequence of the new monetary regime, Ireland decided to break the sterling link and joined the monetary union in This paper discusses the advantages and disadvantages of Ireland's participation in the single currency area.
Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Get Access Economic and Monetary Union EU Essay Sample Economic and monetary union was a recurring ambition for the European Union from the late s onwards because it promised stability and an environment for higher growth and employment.
However, a variety of political and economic obstacles barred the way. Weak political commitment, divisions over economic priorities and turbulence in international markets all played their role in frustrating progress towards EMU.
Despite these obstacles, the second half of the 20th century saw a constant search by the growing number of EU Member States for deeper economic integration as a means of strengthening the political bonds between them and protecting the common market.
From the Treaty of Rome to the Werner Report, to The international currency stability that reigned in the immediate post-war period European economic and monetary union essay not last. Turmoil on international currency markets between and threatened the common price system of the common agricultural policy, a main pillar of what was then the European Economic Community.
From the Werner Report to the European Monetary System, to The Werner group set out a three-stage process to achieve EMU within ten years, including the possibility of a single currency.
The Member States agreed in principle in and began the first stage — narrowing currency fluctuations. Subsequent attempts at achieving stable exchange rates were hit by oil crises and other shocks until, inthe European Monetary System EMS was launched.
An exchange rate mechanism ERM was used to keep participating currencies within a narrow band. The EMS represented a new and unprecedented coordination of monetary policies between the Member States, and operated successfully for over a decade.
This success provided the impetus for further discussions between the Member States on achieving economic and monetary union. From Maastricht to the euro and the euro area, to The Delors Report proposed a three-stage preparatory period for economic and monetary union and the euro area, spanning the period to European leaders accepted the recommendations in the Delors Report.
After a decade of preparations, the euro was launched on 1 January At the same time, the euro area came into operation, and monetary policy passed to the European Central Bank ECBestablished a few months previously — 1 June — in preparation for the third stage of EMU.
This is because the post-war order for the market economies of Europe, North America and Japan was founded on the Bretton Woods system which provided the international framework for currency stability, with gold and the US dollar as the predominant monetary standards.
Currency turmoil strikes in the late s The Bretton Woods system had already begun to show signs of strain in the late s, and bya new era of currency instability threatened when market turbulence forced a revaluation of the German mark and devaluation of the French franc.
This endangered the stability of other currencies and the common price system of the common agricultural policy — which was, at that time, the main achievement of the European Community. The Community seeks economic prosperity and political development in EMU Against this troubling background, and with the customs union largely achieved, the Community was anxious to set itself new goals for political development during the next decade.
The Barre Report, which proposed greater economic coordination, brought new impetus, and Economic and Monetary Union became a formal goal at a summit in The Hague in The final objective would be the irreversible convertibility of currencies, free movement of capital, and the permanent locking of exchange rates — or possibly a single currency.
To achieve this, the report called for closer economic policy coordination, with interest rates and management of reserves decided at Community level, as well as agreed frameworks for national budgetary policies.
The creation of the European Monetary System in laid the foundations for a new era of monetary co-operation. From the Werner Report to the European Monetary System, to The first stage, narrowing of exchange-rate fluctuations, was to be tried on an experimental basis without any commitment to the other stages.
Unfortunately, the Werner strategy took for granted fixed exchange rates against the dollar. This was a mechanism for managing fluctuations of their currencies the snake inside narrow limits against the dollar the tunnel. Hit by oil crises, policy divergence and dollar weakness, within two years the snake had lost many of its component parts and was little more than a German-mark zone comprising Germany, Denmark and the Benelux countries.
The European Monetary System was built on the concept of stable but adjustable exchange rates defined in relation to the newly created European Currency Unit ECU — a currency basket based on a weighted average of EMS currencies. In the event of the maximum fluctuation margin being reached, central banks had to intervene by buying or selling the currency to avoid the margin being exceeded.
The EMS was a radical new departure because exchange rates could only be changed by mutual agreement between participating Member States and the Commission — an unprecedented pooling of monetary sovereignty. But by the time of the negotiations on the Maastricht Treaty init had proved a success.
Short-term volatility of exchange rates between European Community currencies was substantially reduced, thanks to a mixture of converging inflation rates, and interest rate management which targeted the exchange rate. The single currency would complete the single market The case for EMU turned on the need to complete the single market, the programme adopted in for removing all remaining barriers to the free movement of goods, services, people and capital.
It was clear that the full benefits of the internal market would be difficult to achieve with the relatively high business costs created by the existence of several currencies and unstable exchange rates. Their unanimous report, submitted in Aprildefined the monetary union objective as a complete liberalisation of capital movements, full integration of financial markets, irreversible convertibility of currencies, irrevocable fixing of exchange rates, and the possible replacement of national currencies with a single currency.The European Monetary Union The European Monetary Union (EMU) serves as an economic necessity, a complement to the European single market, which is the free movement of people, goods, services, and capital within the European Union (EU).
European Economic and Monetary Union The Economic and Monetary Union (EMU) is a single currency area within the European Union in which people, goods, services and capital move without restriction (Europa Quest (1), ). The European Monetary Union The European Monetary Union (EMU) serves as an economic necessity, a complement to the European single market, which is the free movement of people, goods, services, and capital within the European Union (EU).
To understand the concept behind the creation of the Economic Monetary Union, the overall objective of the European Union must firstly be understood. Since the end of the World War II, European political forces have been attempting to unite forces in order to escape the extreme forces of nationalism which were seen as unsustainable.
European Economic Community Essay The European Economic Community (EEC), also known as the Common Market, was established by the Treaty of Rome among France, Italy, West Germany, Belgium, Luxembourg, and the Netherlands.
European Economic and Monetary Integration, and the Optimum Currency Area Theory Francesco Paolo Mongelli (ECB)∗ Abstract: This essay follows the synergies and complementarities between European Economic and Monetary Union (EMU) and the optimum currency area (OCA) theory.
Various The essay is organised as follows.