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History of the Euro

History of the Euro. By Lindsey Johnston. Agenda. The European Union Treaties The European Central Bank The Euro/Eurozone Who does not use the Euro? Pros/Cons PIIGS Converting to the Euro Europa Series of Euro B anknotes. European Economic Community  European Union.

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History of the Euro

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  1. History of the Euro By Lindsey Johnston

  2. Agenda • The European Union • Treaties • The European Central Bank • The Euro/Eurozone • Who does not use the Euro? • Pros/Cons • PIIGS • Converting to the Euro • Europa Series of Euro Banknotes

  3. European Economic Community  European Union • A unique economic & political partnership between 27 European countries • First created in 1958 in the aftermath of the Second World War • Based on the rule of law: everything founded on treaties, voluntarily and democratically agreed upon by all member countries

  4. Treaties • 1951: Treaty of Paris • European Coal and Steel Community • 1957: Treaty of Rome • European Economic Community (EEC) • 1993: Maastricht Treaty • European Union (EU) & the euro • 1997: Treaty of Amsterdam • 2009: Treaty of Lisbon

  5. Development of the European Union • Denmark • Ireland • United Kingdom • Spain • Portugal • Bulgaria • Romania • Belgium • France • Germany • Italy • Luxembourg • Netherlands • Greece • Austria • Finland • Sweden • Czech Republic • Cyprus • Estonia • Latvia • Lithuania • Hungary • Malta • Poland • Slovenia • Slovakia

  6. Membership Conditions • Legal Requirements • ‘Copenhagen Criteria’ • Stable institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; • A functioning market economy and the capacity to cope with competitive pressure and market forces within the Union; • The ability to take on obligations of membership. • Accession Negotiations

  7. Who is Next? Croatia “United in Diversity”

  8. The Euro/Eurozone • The single currency of 17 of the 27 Member States • 1999: euro used for non-cash transactions of 11 Member States • 2002: used in physical form of banknotes and coins for all payments • Each new EU Member State is expected to adopt the euro once it meets necessary criteria.

  9. Conversion Rates, January 1st 1999

  10. Who does not use the Euro? Why? • Denmark & UK have opt-out clauses in the Treaty exempting them from participation • Sweden deliberately did not meet criteria  de facto opt-out • Others are currently preparing to join the Eurozone

  11. Pros of the Euro: • Promotes trade  stable economy • Greater security and more opportunities for businesses and markets • Eliminates fluctuating exchange rates/costs • More integrated financial markets • A stronger presence for the EU in the global economy • A tangible sign of a European identity

  12. Cons of the Euro: • Limits independence of the monetary policy being implemented by a country • Loss of national sovereignty • Larger countries can directly/indirectly influence decisions of the ECB • Debt problems…

  13. PIIGS • Portugal, Ireland, Italy, Greece and Spain • Considered the European Union’s weakest link • Unstable economies  financial trouble & national debt

  14. Joining the Eurozone – ‘Convergence Criteria’

  15. Europa Series of Euro Banknotes • Second series of euro banknotes • Enhanced security features • Will be gradually introduced in the euro area over the next few years • €5 banknote started circulating on May 2nd, 2013

  16. Summary: History of the Euro • Set as a goal in the Maastricht Treaty in 1992 • Born as a virtual currency in 1999 • First appeared in people’s pockets in 2002 • Is an important and tangible indicator of the European Union’s values: • Freedom • Democracy • The rule of law • Respect for human rights • Equality

  17. References • "Creating The Euro Zone." Across the Pond. N.p., n.d. Web. 08 May 2013. <http://iuwest.wordpress.com/2011/12/12/creating-the-euro-zone/>. • "Scenarios for Adopting the Euro - European Commission." Scenarios for Adopting the Euro - European Commission. N.p., n.d. Web. 30 May 2013. <http://ec.europa.eu/economy_finance/euro/adoption/scenarios/index_en.htm>. • “The Euro Benefits and Challenges.” ECB:. N.p., n.d. Web. 30 May 2013. <http://www.ecb.int/press/key/date/2007/html/sp071126.en.html>. • "Why New Banknotes?" - ECB. N.p., n.d. Web. 30 May 2013. <http://www.new-euro-banknotes.eu/Europa-Series/Why-new-banknotes>. • Ramos, John Louie. "The Benefits and Disadvantages Adopting the Euro." Helium. Helium, 10 July 2011. Web. 02 June 2013. <http://www.helium.com/items/2193436-the-benefits-and-disadvantages-adopting-the-euro>. • Alesina, Alberto, and Francesco Giavazzi. Europe and the Euro. Chicago: University of Chicago, 2010. Print.

  18. Thank You! Questions?

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