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New banknotes and coins for Europe.

Extracts from this document...

Introduction

January 2002 - new banknotes and coins for Europet Our new currency has been years in the making. The Treaty of Rome (1957) declared a common European market as a European objective with the aim of increasing economic prosperity and contributing to "an ever closer union among the peoples of Europe". The Single European Act (1986) and the Treaty on European Union (1992) have built on this, introducing Economic and Monetary Union (EMU) and laying the foundations for our single currency. The third stage of EMU began on 1 January 1999, when the exchange rates of the participating currencies were irrevocably set. Euro area Member States began implementing a common monetary policy, the euro was introduced as a legal currency and the 11 currencies of the participating Member States became subdivisions of the euro. Greece joined on 1 January 2001 and so 12 Member States introduced the new euro banknotes and coins at the beginning of this year. The successful development of the euro is central to the realisation of a Europe in which people, services, capital and goods can move freely. This is history in the making. It is the largest monetary changeover the world has ever seen - join us in celebrating and finding out more about our new currency. Our new single currency originates in the Treaties. All the Treaties were prepared and signed by members of the European Council, which comprises the Heads of State or Government of each of the Member States of the European Union (EU), and then ratified by each country according to national legislative procedures. The elected governments of Member States together created and developed the euro. In Madrid in December 1995, the European Council adopted the name "euro". The European Central Bank (ECB) was established on 1 June 1998. It is based in Frankfurt am Main, Germany, and aims to maintain price stability and to conduct a single monetary policy across the euro area. ...read more.

Middle

As has probably become clear from my remarks so far, we can derive considerable satisfaction from observing how well the immediate challenges of the introduction of the euro have been mastered, both by the financial markets and monetary policy-makers. Allow me in the second part of my address to concentrate on some of the longer-term challenges which the project of monetary unification will face. One single monetary policy for 11 different economies Looking at EMU from an external perspective, one might be tempted to ask: "It has worked so far, but will it last?" Is it sustainable for the Eurosystem to conduct a single monetary policy while economic policies continue to be shaped by 11 different governments? The blueprint for economic and monetary union as set out in the Maastricht Treaty does indeed envisage the establishment of a single monetary policy to be conducted by a new supranational institution, the Eurosystem, with the ECB at its centre. Economic policies, on the other hand, have essentially remained the competence of the Member States. At the time, many commentators doubted the feasibility of a monetary union in Europe without some form of "political union". Today, nine months into the life of the new currency, our first experiences allow us to paint the following picture. From the very outset, monetary union in Europe has been conceived as a complement to the Single Market, a logic neatly summarised in the title of the Delors Report study: "One market, one money". Europe's Single Market already represents a remarkable degree of economic integration. A plethora of common rules govern economic life in the 15 Member States and create, to a large extent at least, a unified market serving 375 million people. The realisation of the free movement of goods, services, capital and people has integrated national economies and rendered national borders increasingly obsolete. A common competition policy has created a level playing-field, and common norms and standards guarantee Europe-wide market access. ...read more.

Conclusion

The Treaty does not determine how and when the single currency will be introduced. This was decided by the European Council at its meeting in Madrid on December 15 and 16 in 1995. It was at this time that the Madrid Council decided that the name of the single currency will be the euro. What will be the effects of the euro? In general Advantages 1. The elimination of exchange rate risks and foreign currency transaction costs for trade, tourism and investment among participating member states. 2. The likelihood of low and fairly uniform interest rates; promotion of price stability, sound public finances and sustained low inflation growth. Competition among producers and suppliers in the euro area is expected to become more intense so helping to keep inflation down. Disadvantages 1. A participating member state will no longer be able to devalue its currency or change its interest rates in response to changes in economic circumstances. 2. A single monetary policy also involves a certain pooling of sovereignty. 3. The changeover itself may involve short-term costs for business and others. For farmers The euro should be beneficial to all businesses, including farming. All the countries in the euro-zone will be dealing in the same currency. This will make it easier to compare the prices of inputs (for example silage additives, machinery parts, veterinary products) and make it easier to shop around for the best price in the twelve euro-zone countries. Farm business transactions All personal and farm business transactions will be done in euros from early January. This means that: * You will be writing cheques and handling cash in �. * You will be paying for your petrol and diesel in �. * You will be paid in � for the milk, beef, livestock, grain etc. you sell off the farm. * You will be buying all farm supplies in �. * You will be buying your groceries in �. * You will be bidding for and paying for livestock in marts in �. * All EU premia and scheme payments will be in � ...read more.

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