History of the Euro Ray McGuinness BA 543 – 6/4/13

First, some numbers Europe’s Population: 730 million in 47 countries USA: 313 million in 50 states European Union: 27 members states 17 use the Euro (€) officially € 920 billion in circulation worldwide Second largest reserve currency Used by more than 500 million people worldwide

How’d We Get Here? 1920s: League of Nations 1951: European Coal and Steel Community (ECSC) 1958: European Economic Community (EEC) 1979: European Currency Unit (ECU) 1992: Maastricht Treaty created the European Union and the Economic and Monetary Union (EMU)

Let’s Make a Currency! Maastricht Treaty agreed to the formation of a central currency by 1999. Euro name suggested by a Belgian teacher. Member Nations would have to meet requirements

Creation European Central Bank & European Commission assessed Member Nation health and fixed currency rates on December 31, 1998. January 1, 1999 Euro is created in digital form January 1, 2002 after minting €7 billion in bills and €38 billion in coins the Euro officially hit the streets

How’d that go? Countries had to abandon their sovereign currency after two months ATMs, Banks, and Vendors Central Bank monitors and controls monetary policy for all member nations Surprisingly smooth transition Little to no raise in prices

A decade later…

Current State of Eurozone 17 Members Nations No member nation has ever withdrawn. GDP: €9.5 trillion European Central Bank & the Euro Group Bailouts and the Sovereign Debt Crisis

Struggles No centralized government Two Speed Economies Raise or Lower Interest Rates? Loss of sovereignty and control

Advantages Elimination of exchange-rate fluctuations  Price transparency Transaction costs  Increased trade across borders Increased cross-border employment Expanding markets for business  Financial market stability  Macroeconomic stability  Lower interest rate  Structural reform for European economies