1. The Euro in 2009
By A.V. Vedpuriswar
February 28, 2009

2. Brief introduction European Economic Community European Common Market
Exchange Rate Mechanism, 1992
Euro officially adopted on 16 December 1995.
On 1 January 1999, it replaced the former European Currency Unit (ECU) at a ratio of 1:1.
Physical coins and banknotes entered circulation on 1 January 2002.
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

3. Current status
The euro is the official currency of 16 out of 27 member states of the European Union (EU).
The currency is also used in a further five European countries, with and without formal agreements .
Outside the EU, the euro is also the sole currency of several European micro states and Kosovo and Montenegro.
23 states and territories have currencies that are directly pegged to the euro .
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

4. Member Countries Ireland Netherlands Greece France Portugal Belgium
Spain
Luxembourg
Italy
Cyprus
Malta
Netherlands
France
Belgium
Finland
Austria
Germany
Slovakia
Slovenia
Don’t do things which you are not passionate about
Don’t worry about results.
Luck favours the prepared people.
You will develop yourself better.

5. Potential entrants into Euro Zone
Country
Status
Hungary
Keen but has found it difficult to meet budget deficit target
Poland
Earlier cynical, now keen to join but long struggle ahead
Denmark
Can easily make the cut, but must pass referendum.
Sweden
Can also join easily if it can make up its mind.
Iceland
Will be desperate to join, in light of the recent crisis. UK
Continues to dither, unlikely to join soon.
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

6. Background
The euro was established by the provisions in the Maastricht Treaty.
Member states had to meet strict criteria such as
a budget deficit of less than three per cent of their GDP,
a debt ratio of less than sixty per cent of GDP, low inflation, and
interest rates close to the EU average.
The United Kingdom and Denmark opted out of monetary union .
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

7. Functioning
The euro is managed and administered by the ECB and the Eurosystem (composed of the central banks of the Eurozone countries).
The ECB has sole authority to set monetary policy.
The Eurosystem participates in the printing, minting and distribution of notes and coins in all member states, and the operation of the Eurozone payment systems.

8. Historical perspective
The rates were determined by the Council of the European Union, based on the market rates on 31 December 1998.
They were set so that one European Currency Unit (ECU) would equal one euro.
The ECU of course was only an accounting unit used by the EU, based on the currencies of the member states.
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

9. Euro rollout
The currency was introduced in non-physical form (travellers' cheques, electronic transfers, banking, etc.) at midnight on 1 January 1999, when the national currencies of participating countries (the Eurozone) ceased to exist independently.
Their exchange rates were locked at fixed rates against each other.
The notes and coins for the old currencies, however, continued to be used as legal tender until new euro notes and coins were introduced on 1 January 2002.
The changeover period during which the former currencies' notes and coins were exchanged for those of the euro lasted about two months, until 28 February 2002
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

10. Euro Bets, Hopes and aspirations
Economic integration
Stable currency to rival the US Dollar
Devaluation ruled out
Tinkering with monetary policy ruled out
Tinkering with fiscal policy difficult due to Mastricht treaty
All this would foreclose easy options, lead to discipline
Thereby unleashing a wave of reforms
Leading to improvements in productivity
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

11. Reality Euro has resulted in exchange rate stability.
ECB has controlled inflation as effectively as the highly respected Bundesbank.
ECB has demonstrated its independence.
Benefits of Euro have been evident for the weaker economies.
Smaller economies outside the Eurozone have been affected by recent financial crisis. Eg., Iceland, Denmark, UK, Hungary
In contrast, Ireland, Spain, Belgium escaped currency turmoil.
Euro has emerged as a rival to the dollar.
But anticipated structural reforms have not come.
Serious economic imbalances remain.
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

12. Euro as a reserve currency
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

13. Dollar vs the Euro Dollar enjoys the incumbency effect.
Outside EU, bulk of cross border sales are invoiced in dollars.
Euro area bond markets are smaller and less liquid compared to American Treasuries.
16 separate bond markets exist in the Euro zone.
The mettle of reserve currency is tested during bad times.
The dollar has come out better.
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

14. Cracks in the Eurozone
Rising wage costs & lower competitiveness in Greece, Ireland, Italy, Portugal and Spain.
Greece, Portugal, Spain, Ireland, Italy struggling with public debt.
Ten year government bond yields have diverged sharply.
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

15. No option to devalue : Rising wages mean lower competitiveness
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

16. Fiscal indiscipline is raising yields in weaker economies
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

17. Separating the men from the boys : Diverging bond yields
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.

18. Conclusion Touted strengths of euro zone were more apparent than red.
Imbalances within Euro zone have always existed.
Huge internal divide exists between Germany (excess savings) and others (like Spain & Greece).
Rigidities in labour, product markets have not been addressed effectively.
Fiscal discipline has been missing.
ECB has focused on inflation; has been behind the curve in cutting interest rates.
Euro area growth continues to lag behind other developed countries like the US.
Non-strikers ( supporting team members) are also important.
Exposure to success and failures makes you a complete personality.
Go out of your way to put your juniors at ease.
But when saying sorry comes easily to us, we tend to be less overawed.