VALAHIA UNIVERSITY OF TÂRGOVIȘTE

FACULTY OF ECONOMICS
SPECIALIZATION: MANAGEMENT
YEAR III

INTERNATIONAL POLITICAL ECONOMY

EQUIVALENT TO
BUSINESS COMMUNICATION AND NEGOTIATION

THE POLITICAL ECONOMY OF MONETARY

INTEGRATION IN EURO AREA

SCIENTIFIC COORDINATOR, STUDENT

DR. HAZAKIS KONSTANTINOS DOBRESCU TIBERIU ALEXANDRU

2017
European monetary policy

Content

Introduction

1. The main moments of the formation of the economic and monetary union
2. European Monetary System
2.1. ECU (European Currency Unit)
2.2. European Monetary Cooperation Fund
2.3. European Monetary Institute
2.4. Exchange rate mechanism
3. Common monetary policy
3.1. The convergence criteria
4. European currency, Euro
4.1. Introduction of the euro
4.2. The legal framework of the euro
4.3. States that use the single European currency
4.4. Euro a success or a project failed?
4.5. Pleading for Euro
4.6. Euro Limits
4.7. Advantages and disadvantages
5. BIBLIOGRAPHY
5.1. Annex 1
5.2. Annex 2
5.3. Annex 3

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 European monetary policy

Introduction
The European Union is a political and económico social space in construction, nature and
consistency different from traditional forms of group interests economic and societal social scale.
Shaping and consolidation of the European space involved a series of transformations of economic and
socio-political structures, which have resulted informs Pulling over time: 1

- camert area free which represents that form of integration in which two or more countries agree to
remove tariff and non of them, by agreement prefenţial trade, but each country maintains its own trade
barriers in trade with non.

- customs union, as fOrma integration that countries remove trade barriers in place between them and
adopt a common external customs tariff to third parties

- common market, Which is a union which customs min liberalization of the movement of goods
and services liberalization is accompanied by movement flows of factors between countries.

- internal market, Form which involves, besides achieving a common market for the free movement
of goods and services, economic growth, social policy harmonization, consolidation of Community
institutions;

- EMU Which are formed from single internal market, in which

It places increasing harmonization of national economic policies, particularly those relating to fi nancial
monetary sphere pending the adoption of a single currency and common institutions of monetary fi
nancial management issues at Community level.

- Complete economic integration (Or total) as the last stage of integration in which the movement
UNIFI
economic policies is completed by establishing a supranational units whose decisions are
binding on Member States. Complete economic integration involves completing all the steps described
above, acquiring integrated space features similar to those of a national economy: institutions that
govern with common legislation by using a common budget and addressing a market of production and
sales joint; using a single currency and banking system homogeneous common internal and external
policies.

Currently, the European Union is covered by phase conomic and Monetary Union building.
Economic and Monetary Union as a form of Integration includes all 25 Member States European
Union, except that some of them (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, and Spain) have adopted the euro, two countries (United Britain,
Denmark) benefi ts of clause optout1,
allowing them to choose whether or not to make the euro area and other Member States,
the status of a "Member State with a derogation from adopting the euro" will have to join the euro in a
indefinitely.

Regarded as a higher stage of multinational integration, economic and monetary union

It is the result of deepening, increase cation integration and includes:
- common monetary policy
- coordination of economic policies

1
https://europa.eu/european-union/about-eu/eu-in-brief_en

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 European monetary policy

Member States
- the single currency
- liberalization of capital flows
- an institutional system to coordinate and manage monetary policy
The prerequisite for the establishment and functioning of integrative forms of economic and
monetary union type is the existence of a common market of goods and services, even if the European
Union Economic and Monetary Union is rather associated with the single internal market.
Stage of Economic and Monetary Union, including, as I noted above, the elimination
exchange and implementation of a common monetary policy leads to lower costs and risks that
previously could emphasize or, where appropriate, to prevent interpenetration of capital markets,
generate distortions of the common agricultural market or allow industrial policy a development unit
that will lead to a market
common in the field.

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 European monetary policy

1. The main moments of the formation of the economic and monetary union
European Economic and Monetary Union is the result of a complex integrative process, both
in the real economy and in the monetary economy, developed over half a century in the Community, a
process which involved several steps. 2
Of these, the most important are:

- Creating a monetary arrangement called European Payments Union (1950) consists not only in
European countries but by the pound and the franc zone, and the AFL-financed African countries in
space colonies.

- Creating European Economic Community which meant liberalize flows of goods and
services and the single market liberalization of the movement of production factors.

- Creation of the European Monetary System (1979)subsequently replaced by Rate Mechanism

Exchange with its two forms.- 1969 Hague Summit in which
The issue of creating an economic and monetary union;

- Werner Report of 1970Which proposed the creation of the European Monetary Union with the
irrevocable fixing of parities between the currencies of the Member States and the total liberalization of
capital flows;

- Creation, in 1988, the Committee for the Study of Economic and Monetary Union, lead by
European Commission President at the time, Jaques Delors who proposed the report that bears his
name, a new basis for UNIFI monetary movement in Europe. Delors a Report defi ned strategy that has
led to, in several stages of monetary union.

- Treaty of Maastricht (1992) on the European Union constitution, which the monetary front, the
central bank setting consfi nţit Union and established criteria Member
States must fulfill to become a member of the European monetary area.

- Creating EurosystemWhose operation is based on

several general principles among which institutional independence and fi nancial Bank
European Central central banks of the Member States, transparency, subsidiarity and
responsibility in achieving goals by the Treaty of Maastricht.

- Introduction of the euro since January 1999.

2
https://en.wikipedia.org/wiki/Economic_and_Monetary_Union_of_the_European_Union

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 European monetary policy

2. European Monetary System

At the beginning of the seventh decade, amid signing customs union formation and launch of
the highly positive results of the CAP, there were a number of events such monetary fi nancial
divergent across Member States.
For this reason, in 1970 the Werner Plan was developed, which have established goals and
steps Monetary Union. Through this plan, the monetary union aim "full convertibility of currencies of
Member States and irreversible elimination of exchange rate fluctuations, fixity irrevocable parity and
exchange rates and the complete liberalization
capital flows. "Werner Plan, authorized by ECOFIN in 1971, not It could not be implemented due to
economic circumstances Overview: the fall of the Bretton Woods system, which was based on fi xed
system courses rejection strengthen the idea of adoption of a common monetary institutions
and applying the fiscal policy unit at Community level.
Since April 1972, it was implemented arrangement known as "snake
currency "in which the currencies of the six founding members of the Economic Community
Europe (which were subsequently added UK and Denmark) kept together a fluctuation margin of +/-
2.25% with as pivotal US dollar, which meant that between coin highest ranked and most poorly rated
may be a difference of not more than 4.5%. Maintaining relationships between currencies values set
frequent interventions made by central banks.
The monetary snake worked with difficulty, with frequent moments of withdrawal and return
of the Member States and a number of parity readjustments through devaluation and revaluation.
He was replaced by the European Monetary System, following the European Council in
Brussels in December 1978. Based on the joint motion Chancellor Helmut Schmidt and French
President Valery Giscard d'Estaing created the European Monetary System, seen as a tool creating a
zone of monetary stability in the Community,
but also as a link between Bretton Woods and EMU.
European Monetary System, negotiated in 1978 and adopted in 1979 by the nine member
states of the European Community at the time, who became de facto members thereof, aimed mainly
forming a zone of monetary stability in space economic, whose countries registered at the time trends
of reducing the differences between their levels of development. The main system components are:
- European unit of account (ECU) used in fi nancial settlements;
- monetary cooperation fund, established in 1973;
- exchange rate mechanism;
- European Monetary Institute.

2.1. ECU (European Currency Unit)

ECU (European Currency Unit)It was introduced in 1975 as the official unit of account of
the European Community replacing European Unit of Account. In terms of structure, ECU represented
a nominal currency, a basket currency actually formed according to the economic strength of Member
States participating in its creation.
Unlike exchange-rate mechanism, ECU included all the EU states that were members of the
European Monetary System.
Originally, parity ECU dollar was 1-1, and the ECU was used mainly to cover transactions
financial- monetary (including issuance of bonds and other debt securities), public and private hence
the name ECU ECU respectively public and private, and less (about 1%) to cover commercial
transactions.
Subsequently, the unit of account was extended by its use in community budgeting. In 1995,
ECU was named euros and in 1999 ECU has ceased to exist.

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 European monetary policy

In accordance with art. 118 EC, ECU currency basket composition has been "frozen" 1
noiembrie1993, the entry into force of the Treaty of Maastricht, based on the composition of the basket
on 21 nseptembrie 1989.
The European Council in Madrid in December 1995 decided that at the start of the third
stage, the name given to the European currency is that the euro have names that symbolize Europe to be
is the same in all the official languages of the European Union.

2.2. European Monetary Cooperation Fund

European Monetary Cooperation Fund,created in April 1973, represents a pool consisting of
gold deposits in dollars (each in 20%) of reserves countries whose currencies were included in the
ECU, even if it belonged to rate mechanism
exchange. Fund operate on the principal of short-term loans on which central banks provide to each
other, short and medium term loans for balance of payments and ECU mobilization mechanism.4
To manage the facilities granted by the EMCF was entitled BIS. In accordance with the
provisions related to the second stage of EMU, the European Monetary Cooperation Fund was
dissolved and its functions were taken over by the European Monetary Institute.

2.3. European Monetary Institute

European Monetary Institute It was established in 1994 with headquarters in Frankfurt,
Germany. The fi nancial instruments and procedures of specific European Monetary Institute was
intended to strengthen
cooperation between national central banks of EU countries to oversee the functioning of the European
Monetary System and to strengthen coordination of the monetary policies of the Member States in
order to ensure price stability. Resources were made up of central banks contribution calculated
according to population 50% and 50% depending on the GDP.
2.4. Exchange rate mechanism
Exchange rate mechanism Introduced in 1979 to reduce fluctuations in the nominal value of
the currencies of the Member States, based on mutual support and collective action of the central banks
of the Member States. Central banks intervene in currency markets, buying and selling currencies to
influence their value. The intervention was based on the principle of supply and demand: when a
currency value fall below a certain threshold, agreed and called margin or corridor of fl uctuation
central banks intervened, restoring market value of that currency. When the 1992 crisis, the exchange
rate mechanism had ten members. Spain went into this arrangement in 1987, Britain in 1990 and
Portugal in April 1992. Greece was not part of the mechanism due to the bad economy,
Exchange rate mechanism was based on a parity system that allowed each coin to fl uctueze
limited in relation to each of the currencies in the system established at the same time, a central parity
rate in ECU. Initially, currencies were allowed a fl uctuation of +/- 2.25% around the central parity,
except for Italy which allowed a rate of fl uctuare 6% due to infl atio difficulties which were raised and
internal political.
Monetary arrangement called ERM recorded a number of particular features, meaning it was
the first system of exchange rates European entirely, without reference to extra-base currency.
At the same time, he has not built around a pivot currencies but on a bilateral exchange
mechanism. The crisis of 1992-1993, during which two currencies (sterling and Italian) have
withdrawn from the system, five of them have realigned exchange rates (the Spanish peseta, the
Portuguese escudo, Irish pound, Danish krone and the French franc ) and one of them reached uctuare fl
margins of +/- 15% showed that monetary integration with multiple currencies in circulation does not
AFL financed expected results and that the only way to achieve this goal is the currency
unique.
To put the question of reconsidering the monetary-financial discipline in the system through
operational flexibility and the creation of new mechanisms to monetary integration.

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 European monetary policy

For this reason, in 1999, when it adopted the single currency was launched a second mechanism of the
exchange rate, called ERM 2, in which the multilateral system was replaced with a bilateral in which
each currency participating It has defi nită o central parity against the euro. This mechanism allows
intervention by the European Central Bank and the central banks of the Member States, when the
exchange rate exceeds the margin of +/- 15% of the central rate. MRS 2 are part of the euro area
member states and Denmark (the latter choosing a fluctuation corridor of +/- 2.25%.) And a total of six
Member States new entrants in the Community in 2004.
An important objective of the exchange rate mechanism it is helping Member States outside
the Eurozone in the application of macroeconomic stabilization policies in order to boost their
convergence necessary to achieve entry into the Eurozone.

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 European monetary policy

3. Common monetary policy

The Treaty of Rome does not refer explicitly to the introduction of a single currency or to a
system of coordination of monetary policies between Member States, but only by paragraphs 103-107,
states that "each country participating in the integration process considers cyclical policies and
exchange rate policies that elements of a mutually acceptable consensus, considering the exchange rate
as being a matter of common interest " 3
During the first years of European construction, where they founded the customs union and
have created instruments of the CAP, the Community perspective the main problem was adjusting
monetary exchange rates.
This was because both operations and performance of the common commercial policy and the
Common Agricultural Policy were heavily infl uenced by currency exchange rate fluctuations.
Treaty on European Union signed in Maastricht in 1991 is what led to the introduction of a
common monetary policy based on a single currency managed by a single central bank
independence.
Under the Treaty, the main objective of the common monetary policy and politics
exchange rate represents price stability and, without prejudice to this objective, to support the general
economic policies of the Union, in accordance with the principles of free market economy and
competition.
Although the formation of economic and monetary union was seen as being the result of a
single process, it can be divided into three stages:
First phase, (July 1, 1990 and December 31, 1993) whose core elements were established
before Maastricht was market consolidation stage and ushered in the creation of economic and
institutional structures and their economic union
money.
The central objective of this phase is the greater convergence of economic policies and
cooperation between central banks in order to incorporate monetary practices of Member States in the
European Monetary System.
Within it have made some progress on the abolition of restrictions on capital movements,
strengthening exchange rate mechanism and strengthening of cooperation between central banks of the
Member States.
At this stage in the process of consolidation of the market, the Council established a framework for
convergence
economic performances of the Member States and monitoring progress on the basis of
periodic reports.
The second stage began on January 1, 1994 and ended 31 December 1998. During this
stage, based on the provisions of the EU Treaty Member States were constrained săevite excessive
budget deficits, and initiate steps towards central bank independence. In the process of increasing
central bank independence, the Treaty forbidding their government granting credit facilities or
purchasing instruments on
public debt directly from them. Besides being an explicit prohibition of direct-financing
Cité defi public Treaty also provided by art. 102 public authorities have no privileged access to fi
nancial institutions, unless it was based on prudential grounds. In other words, the Treaty tried to
induce induced budgetary control market.
In preparation of the third phase, the Commission and the European Monetary Institute
Council were obliged to report aspects of how national legislation to requirements related to achieving
economic and monetary union and on progress made in meeting the convergence criteria.

3
http://europa.eu/rapid/press-release_MEMO-92-68_en.htm

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 European monetary policy

3.1 The convergence criteria

Criteria Maastricht are rules (convergence criteria) to be met by a country to adopt the euro. Their
purpose is to protect the stability of the currency. Those countries must also implement specific laws
concerning the functioning banks national and other monetary issues. 4

Economic Method of
Convergence criteria
indicator measurement

No more than 1.5 percentage points above the

The duck inflation The
Price stability average of the lowest inflation rates in the three
harmonized consumer
countries with the best results

Sound public Government deficit as%

Reference value: not more than 3%
finances of GDP

Sustainable public
Public debt as% of GDP Reference value: not more than 60%
finances

No more than 2 percentage points above the rate of

Sustainability
Long-term interest rate the three countries with the best results in terms of
convergence
price stability

Exchange rate The deviation from a Participation in European mechanism for the
stability central rate exchange rate for two years

Maastricht Treaty conditions participation in the economic and monetary union by the
fulfillment of The nominal convergence criteria, As a quantitative reference targets, also known
under the name of the Maastricht criteria 5
These are:
- infl ation low rate that does not exceed by more than 1.5% best performing Member States
participating in before the examination;
- low interest rates for long-term loans that do not exceed by more than 2% interest in the
performing Member States participating in before the examination;
- defi cit a budget not exceeding 3% of GDP
- cumulative public debt not exceeding 60% of GDP;
- exchange rate stability in the maintenance course national boundaries normal fluctuation margins
of ERM2 for at least two years before entry into the euro area (art. 121 TEC) criterion on the
convergence of the exchange rate is one of the conditions Treaty Maastricht to be achieved by the
Member States before adopting the euro.
This requires mandatory participation in ERM2 for at least two years before entering the euro
area, while it is not permitted realignment of the central parity within the meaning of devaluation in the
two years of participation in the ERM2.
Apart from these factors were taken into account and a number of other factors such as the
degree of integration of markets, the balance of the balance of payments, the unit cost of labor

4
https://ro.wikipedia.org/wiki/Euro
5
https://en.wikipedia.org/wiki/Euro_convergence_criteria

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 European monetary policy

and other elements relevant to market stability.

Along with the nominal convergence criteria, but without being subject to the Maastricht
Treaty, they appeared on the initiative of the European Commission and the European Central Bank a
number of criteria that go on convergence and cohesion economic structures of the Member States and
the candidate countries.
These criterio called real convergence criteria concern:
- openness of the economy, calculated as the share of foreign trade in GDP
- The share of bilateral trade that European Union countries in total foreign trade,
- structure of the three main branches of the economy (industry, agriculture and services)
- GDP per capita, calculated on purchasing power parity;
Since May 1, 1998, following the procedures and roadmap established by the EC Treaty,
upon a Commission recommendation, the Council decided that Belgium, Germany, Spain, France,
Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal and Finland They met the conditions for
adopting the single currency, namely:
- nominal convergence criteria;
- that national legislation, including the statutes of central banks were compatible with the
Treaty and the Statute of the European System of Central Banks.
On the same occasion, the Council decided that Greece and Sweden did not meet the
necessary conditions for adopting the euro and has not examined the state of Great Britain and
Denmark, because, in accordance with the Treaty they have sent notifications to the Council to let him
know that wish to participate in the third stage of economic and monetary union.
In fact, in analyzing how the convergence criteria was achieved or made a series of
concessions of which we mention those related to public debt in GDP (for Italy and Belgium) and the
budget deficit (for Germany )
To avoid government controls on issues fi nancial Member States was signed, following the
Treaty of Amsterdam, the Stability Pact and Growth (1997) which was provided discipline fi nancial by
avoiding definitive cite budget above the established limits.
Member States which did not meet the conditions for adopting the single currency from the beginning
has been granted a derogation period, indeterminate, in which there are provisions related to monetary
policy and related penalties excessive deficit.
At the same time, central bank governors of these states are members of the General Council
of the ECB.
In July 2002, following a decision by the Council, Greece was allowed to adopt the euro,
following the fulfillment of the convergence criteria.
Third Step, Began on January 1, 1999 with the establishment of irrevocable exchange rates
between currencies of participating countries and against the euro.
From January 1999, the currencies of Member States (the euro area) continued to circulate
only nezecimale expression of the single currency until
They have been completely replaced by the euro. At the same time, all settlements between Member
States,
issuance of bonds or contracts concluded in the space are necessarily made in euro.
Note that the euro is used as notes and coins and in other countries that are not EU members,
such as Andorra, Iceland, Liechtenstein, etc. Alongside the introduction of the euro in the space formed
by the Member States which have fulfilled the convergence criteria, a crucial moment was the
replacement of national monetary policies
a common monetary policy, conceived by the European Central Bank.

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 European monetary policy

4. European currency, Euro

4.1. Introduction of the euro
In December 1995, Madrid has decided to enter into force from January 1, 1999, the single
European currency and agreed on the name of Euro. Also at this time, it was decided at the latest by
1998, to be nominated European countries that would participate in the European monetary experiment,
participation in the euro will be decided on the basis of macroeconomic indicators of 1997. 6
For the actual introduction into circulation of euro banknotes and coins has been set as the final
date July 1, 2002. Also, until July 1, 2002 would be taken two transitional periods: January 1, 1999 -
January 1, 2002 and 1 January 2002-1 July 2002. for the period 1 January 1999-1 January 2002, the
currencies of countries participating in monetary union would represent expressions nezecimale market
the euro, this being only as scriptural money. During the period January 1st 2002 - June 2002, Euro will
be marketed in the form of coins and notes and will coexist with national currencies of the participating
countries. From July 1, 2002, the Euro will become the only legal tender within Euroland.
On December 1, 1996, in Dublin, reached an agreement on the new mechanism of exchange
between the euro and other EU currencies, with the declared aim to ensure and maintain inside EMU
discipline imposed by the Stability Pact and to clarify the legal status the introduction of the Euro. He
had in mind in particular the continuity of contracts and prevent speculation during the transition on
converting national currencies European / Euro.
Formal agreements discussed in Dublin were adopted. These European meetings meant,
however, important steps EMU line, but can not speak of the existence or establishment of a state of
certainty about the future of the euro and EMU.
The uncertainty derives from the reduced capacity of some EU Member States to comply with
the convergence criteria imposed by the Maastricht Treaty. Germany and France constitute the main
guarantors of European monetary integration. There was also very serious about sustainability of
economic growth in many countries candidates for the January 1, 1999.
Also fulfilled the convergence criteria do not prove sufficient, as long as they could not be
maintained. However European leaders of the moment, were determined to continue efforts to achieve
EMU. These events intentions were materialized in early 1999 with the introduction of the Euro.

4.2. The legal framework of the euro

As of January 4, 1999, the currencies of countries participating in EMU continue to circulate,
but only as expressions of the single currency nezecimale, their status is that of subdivisions Euro.
Decimal expression is Euro cents. Also, after this time, and other changes may be observed:
The police money is no longer designed at national but at Community level by the European
Central Bank,
Eurozone countries -between all payments are made in Euro,
-in the Eurozone was created TARGET settlement system, access to the system but not fully
completed the technical and functional.
Given that a number of commercial contracts concluded prior to 1999 and had the national
currency monedeeuropene contractual or other currencies is necessary to find a solution to the legal
regulation of these contracts since 1999.
In this regard have been adopted at Community level two regulations: "Regulation 1103 /
97bazată on Article 235 of the Treaty published in the Official Journal L 19.6.1997 and regulations
based on Art. Art. 109 (4) of the Treaty published in the Official Journal L 19.6 .1997 by ECOFIN.
The fundamentals underlying these two regulations have been established since 1995 and are as
follows:
- define the status of the single currency and the national currency unit;

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http://europa.eu/rapid/press-release_DOC-95-9_en.htm

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 European monetary policy

- continuity of contracts;
- legal conversion rate between the Euro and other European currencies;
- rounding rules and assessment euro after the conversion.

4.3. States that use the single European currency

- Member States of the European Union
Currently seventeen European countries using the single European currency (Belgium, Germany,
Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal,SloveniaFinland,
Slovakia, Cyprus, Malta, Estonia).
Remember the specific case of Slovenia, belonging to a relatively recent wave of integration and
managed to meet the convergence criteria entered quickly so smooth in the euro area. However, the
outstanding performance of Slovenia was to absorb European funds earlier deadlines being challenged
even their additions.
- Others
Euro is used as currency in other countries that are not EU member states, such as Andorra, Iceland,
Liechtenstein, Monaco, San Marino, Vatican, Montenegro, Kosovo etc. The regular use of the euro in
these countries is subject to financial arrangements with the European Union. However, some countries
(Montenegro and Kosovo) have no legal agreement with the EU.
Other Member States of the European Union will enter the euro zone when they have fulfilled the
convergence criteria laid down by the Treaty establishing the European Union.
- clause opting out
As noted above, the UK and Denmark have a special status, being the direct beneficiaries of clause
opting out clause that allows them to decide when and whether to adopt the euro. Note that from the
British nor was analyzed as long as it has been notified, since 1998, the EU Council that it intends to
participate in economic and monetary union.
- For Romania
To adopt the single European currency, Romania will have to fulfill the convergence criteria set out
below.
Under the plan convergence to the euro area of Romania, in January 2007, Romania will adopt the
euro in 2014.

4.4. Euro a success or a project failed?

It can be said that the idea of a European monetary union is based on two main reasons: 7
-motivaţie pragmatic, related to ensuring the necessary framework for optimal functioning of the
single internal market, perfectly harmonized, thereby also facilitating free movement of capital and
harmonization of markets and financial systems;
-Determination theoretical concept whose pivot currency that emphasizes the role of full mobility
of production factors as a basic element in absorbing the negative effects of asymmetric shocks.
Since its launch in 1999, we can not speak of a coherent or satisfactory functioning of the European
monetary union. The advantages of the single currency are "shadowed" by a number of disadvantages.

4.5. Pleading for Euro

Among the advantages of the European single currency, we can mention:
-inducerea a greater stability in financial markets, reducing volatility, targeting these markets to
conduct macroeconomic narrow range of budget deficit;
-elimination inefficiency uncoordinated national monetary policies;

7
http://www.cer.eu/publications/archive/report/2016/has-euro-been-failure

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 European monetary policy

-expansiunea financial markets - companies handy higher financing facilities, directing their
profits to shareholders, the stability of the single currency is likely to attract a significant number of
investment flows;
-reducing transaction costs;

4.6. Euro Limits

Limits of the single currency can remember:

The costs of high conversion - for example, the high costs of implementation at all levels of
systems capable of promptly execute transactions in Euro and realize automatically convert European
currencies Euro;
-centralizarea power - Euro seems to be a new pretext for centralizing power of the various
powers at Community level, which leads to impaired national sovereignty of Member States with all
the consequences that result.
Impacts on the balance of payments - financing difficulties deficits under conditions imposed
by the Stability Pact and the convergence criteria.
Representing the ESCB IMF - IMF under statute; membership of the national fund of States
so that Community monetary authority is not represented, no meetings of IMF decision-making skills,
enjoying observer status;
- exacerbated political will that accompanied the creation of the monetary union, often
ignoring economic realities; such a situation, given a serious economic downturn can have serious
repercussions on the future of EMU;
- Lack of control bodies in monetary and fiscal policy. Relevant in this regard is the absence
of a European Treasury to take over the debt of the Member States. The creation of such a body would
be an even greater reduction of national sovereignty;
-Percepţia Germany on EMU - whose citizens are unhappy that at this time, DM is the main
currency that supports Euro and fear that they have given up a strong and stable currency, DM in favor
of a single currency to currently there proved credible; ie gave up a strong currency for a weak one;
- deflationary threat. Compliance with the ECB and the Commission plan to achieve in the
Euro, the inflation reduces might occur if this process is "out" of control, a powerful deflationary shock
with negative effects felt full of labor market;
- Two leaders of monetary policy: ECOFIN and the ECB. The two bodies share
responsibility for monetary policy: ECOFIN has responsibilities line foreign policy, monetary policy
and the ECB on the line itself, this sharing of responsibilities but can generate conflicts at all beneficial
between the two bodies.
- Inconsistency and EMU tools to deal with crisis situations. Community authorities appear
to have taken little account management procedures, in EMU, the crisis of financial or real economy. In
some severe seizures might some countries to leave the system, a situation which also not provided any
procedures.

4.7. Advantages and disadvantages

There are a number of effects induced by the introduction of the Euro have a dual character.
These include:

- Reduced transaction costs for agencies and clients on the currency market - the
disappearance of exchange rates between European currencies participating in EMU are contributing to
reducing the cost of trading the foreign exchange market by eliminating currency exchange charges.
These gains translate clients' forex market but with losses for banks. For the latter, late loss may occur
as a result would simplify management of bank assets;

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 European monetary policy

- Share market in wholesale banking - EMU will be a real basis for the opportunities in
corporate banking ( "wholesale"). Capital market will be characterized by a high degree of liquidity,
stimulating local bond markets (municipality) market marketable assets, inter- and intra-sectoral
cooperation transfrotalieră and generating a series of waves of cross-border mergers and acquisitions.
However, EMU could fuel monopolistic behavior in the corporate banking sector, the big banks
attracting smaller businesses as a result of using the advantages of scale, information and market
position.
- perception of the population - Europeans in the euro area will benefit from the abolition of
foreign exchange, the increase in price comparability line etc. At the same time, however, the
population has concerns about the progress and effects of the single currency. A survey by the National
Bank del Lavoro indicates a high degree of concern of citizens from various EU countries on the Euro.
Thus Danish citizens are worried about the prospect of losing national identity following the
introduction of the Euro, the Spanish rising unemployment and inflation, the Italian economy's inability
to meet the demands of a single currency etc. Other concerns include: the fear that some participants
will have to bear the costs of the failure of others, increased immigration, etc.

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 European monetary policy

BIBLIOGRAPHY

1. Appleyard, Dennis Alfred Field, International Economics. Payments, Exchange Rates &
Macropolicy. Richard Irwin 1995
2. Baldwin, R, Wyplosz, C. The Economics of European Integration, Manuscript, 2003
3. Miron, D (coordinator), EU economy European Ed. Star, Bucharest, 2000
4. Moussis, N, Guide to European Policies, European Study Service, Belgium, in 2003.
5. Silas G. European monetary integration between and political theory, Ed. Horizons University
Timisoara, 1998.
6. VAUBEL, R Monetary integration theory In Vol. Surveys in Economics, International Economics,
Longman, London & New York, 1988

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European monetary policy

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European monetary policy

Anexa 3 - English
Description euro banknotes 9

The Position
Denominative Dimensions dominant Architecture Period code
color printing

120 x 62 Left edge of

€5 Gray Classical Fifth century
mm the image

127 x 67 Eleventh century

€ 10 Red Romance Stand at 8
mm and XII century

133 x 72 Thirteenth century

€ 20 Blue Gothic Stand at 9
mm and XIV century

Fifteenth century
140 x 77 Right edge of
€ 50 Orange Renaissance and sixteenth
mm the image
century

Seventeenth
147 x 82 Baroque and The right of
€ 100 Verdant century and
mm Rococo 9 o'clock star
eighteenth century

Nineteenth century Between the

153 x 82 Yellow-
€ 200 Iron and glass and twentieth star at 7 and
mm Brown
century at 8

160 x 82 Twentieth century

€ 500 Mauve Modern Stand at 9
mm and XXI century

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https://ro.wikipedia.org/wiki/Bancnote_euro

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European monetary policy

Drawings on euro banknotes 10

Valu
Front (the front) Back (back)
e is

€5

€ 10

€ 20

€ 50

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https://ro.wikipedia.org/wiki/Bancnote_euro

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European monetary policy

€ 100

€ 200

€ 500

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