The Changeover to the EURO. The euro is the official currency and is divided into 100 cents National currency units are denominations of the euro The euro can only be used for non-cash transactions Anyone can have a euro bank account..even YOU!. 12 Eurozone Countries.
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Austria, Belgium, Finland, France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Portugal and Spain
United Kingdom, Denmark and Sweden are members of the European Union but not the Eurozone.
Ex) 6 member Executive Board of the ECD acts much like the US 7 member FED reserve board
Ex) 11 central banks of European nations imitate action of the 12 FED reserve banks
Ex) with a unified currency the Euro could compare in strength to the dollar
Ex) Monetary policy for France and Germany could prove very costly for Spain and Portugal
Ex) One country whose main concern with the inflation rate would be reluctant to tolerate decreasing interest rates
Ex) Countries maintained individual monetary policies that corresponded to their financial and national status for thousands of years
The 500 euro bill, is worth more than the most expensive note in 11 of the 12 euroland currencies and has been nicknamed the “gangsters’ note”
This new note makes it possible to pack more than 7 million euros in average brief case
Single currency makes it harder to catch money launderers
63 % more fake marks were pulled out of circulation in the first three months of 2001 compared to 2000The Police Challenge
The Banks started moving into Euro notes and coins on September 1, 2001
The Euro became legal tender on January 1, 2002 or also known as “E-day”.
The denominations will be 5 euros, and 8 different coins.
They will look slightly different in each country.
Credit and debit cards wont be effected by the change.
Sovereignty is the main reason why the UK has not joined yet.
They believe that giving up the national currency is the same as giving up national sovereignty.
Is the Euro leading to ONE European super state?
Monetary union will end the a nation’s ability to conduct monetary policy, ONE interest rate?
The ECB is the successor of the European Monetary Institute that was set up 5 years ago.
ECB works hand and hand with national central banks that are within the European system.
They have the exclusive right to authorize the issue of banknotes.
The volume of money is approved by the ECB not central banks.
Considered a double of Germany’s central bank, Bundesbank.
The ECB is headed by Wim Duisenberg.
April 11, 2002:
The European Central Bank has stated that high oil prices could lead to slightly higher inflation than predicted.
Believe that the recent jump in prices will contribute to the recovery of the Eurozone and would begin to slow in speed (negative supply shock).
Oil prices spiked above $27 due to fears of increased violence between Israel and Palestinians.
Eurozone inflation at 2.5% in March, and the rate is still falling but not by as much due to the oil price increase.