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Economic and Monetary Union of the European Union
The economic and monetary union (EMU) of the European Union is a group of policies aimed at converging the economies of member states of the European Union at three stages.
There are three stages of the EMU, each of which consists of progressively closer economic integration. Only once a state participates in the third stage it is permitted to adopt the euro as its official currency. As such, the third stage is largely synonymous with the eurozone. The euro convergence criteria are the set of requirements that needs to be fulfilled in order for a country to be approved to participate in the third stage. An important element of this is participation for a minimum of two years in the European Exchange Rate Mechanism ("ERM II"), in which candidate currencies demonstrate economic convergence by maintaining limited deviation from their target rate against the euro.
The EMU policies cover all European Union member states. All new EU member states must commit to participate in the third stage in their treaties of accession and are obliged to enter the third stage once they comply with all convergence criteria. Twenty EU member states, including most recently Croatia, have entered the third stage and have adopted the euro as their currency. Denmark, whose EU membership predates the introduction of the euro, has a legal opt-out from the EU Treaties and is thus not required to enter the third stage.
The idea of an economic and monetary union in Europe was first raised well before establishing the European Communities. For example, the Latin Monetary Union existed from 1865 to 1927. In the League of Nations, Gustav Stresemann asked in 1929 for a European currency against the background of an increased economic division due to a number of new nation states in Europe after World War I.
In 1957 at the European Forum Alpbach, De Nederlandsche Bank Governor Marius Holtrop argued that a common central-bank policy was necessary in a unified Europe, but his subsequent advocacy of a coordinated initiative by the European Community's central banks was met with skepticism from the heads of the National Bank of Belgium, Bank of France and Deutsche Bundesbank.
A first concrete attempt to create an economic and monetary union between the members of the European Communities goes back to an initiative by the European Commission in 1969, which set out the need for "greater co-ordination of economic policies and monetary cooperation," which was followed by the decision of the Heads of State or Government at their summit meeting in The Hague in 1969 to draw up a plan by stages with a view to creating an economic and monetary union by the end of the 1970s.
On the basis of various previous proposals, an expert group chaired by Luxembourg's Prime Minister and Finance Minister, Pierre Werner, presented in October 1970 the first commonly agreed blueprint to create an economic and monetary union in three stages (Werner plan). The project experienced serious setbacks from the crises arising from the non-convertibility of the US dollar into gold in August 1971 (i.e., the collapse of the Bretton Woods System) and from rising oil prices in 1972. An attempt to limit the fluctuations of European currencies, using a snake in the tunnel, failed.
The debate on EMU was fully re-launched at the Hannover Summit in June 1988, when the ad hoc Delors Committee of the central bank governors of the twelve member states, chaired by the President of the European Commission, Jacques Delors, was asked to propose a new timetable with clear, practical and realistic steps for creating an economic and monetary union. This way of working was derived from the Spaak method.
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Economic and Monetary Union of the European Union
The economic and monetary union (EMU) of the European Union is a group of policies aimed at converging the economies of member states of the European Union at three stages.
There are three stages of the EMU, each of which consists of progressively closer economic integration. Only once a state participates in the third stage it is permitted to adopt the euro as its official currency. As such, the third stage is largely synonymous with the eurozone. The euro convergence criteria are the set of requirements that needs to be fulfilled in order for a country to be approved to participate in the third stage. An important element of this is participation for a minimum of two years in the European Exchange Rate Mechanism ("ERM II"), in which candidate currencies demonstrate economic convergence by maintaining limited deviation from their target rate against the euro.
The EMU policies cover all European Union member states. All new EU member states must commit to participate in the third stage in their treaties of accession and are obliged to enter the third stage once they comply with all convergence criteria. Twenty EU member states, including most recently Croatia, have entered the third stage and have adopted the euro as their currency. Denmark, whose EU membership predates the introduction of the euro, has a legal opt-out from the EU Treaties and is thus not required to enter the third stage.
The idea of an economic and monetary union in Europe was first raised well before establishing the European Communities. For example, the Latin Monetary Union existed from 1865 to 1927. In the League of Nations, Gustav Stresemann asked in 1929 for a European currency against the background of an increased economic division due to a number of new nation states in Europe after World War I.
In 1957 at the European Forum Alpbach, De Nederlandsche Bank Governor Marius Holtrop argued that a common central-bank policy was necessary in a unified Europe, but his subsequent advocacy of a coordinated initiative by the European Community's central banks was met with skepticism from the heads of the National Bank of Belgium, Bank of France and Deutsche Bundesbank.
A first concrete attempt to create an economic and monetary union between the members of the European Communities goes back to an initiative by the European Commission in 1969, which set out the need for "greater co-ordination of economic policies and monetary cooperation," which was followed by the decision of the Heads of State or Government at their summit meeting in The Hague in 1969 to draw up a plan by stages with a view to creating an economic and monetary union by the end of the 1970s.
On the basis of various previous proposals, an expert group chaired by Luxembourg's Prime Minister and Finance Minister, Pierre Werner, presented in October 1970 the first commonly agreed blueprint to create an economic and monetary union in three stages (Werner plan). The project experienced serious setbacks from the crises arising from the non-convertibility of the US dollar into gold in August 1971 (i.e., the collapse of the Bretton Woods System) and from rising oil prices in 1972. An attempt to limit the fluctuations of European currencies, using a snake in the tunnel, failed.
The debate on EMU was fully re-launched at the Hannover Summit in June 1988, when the ad hoc Delors Committee of the central bank governors of the twelve member states, chaired by the President of the European Commission, Jacques Delors, was asked to propose a new timetable with clear, practical and realistic steps for creating an economic and monetary union. This way of working was derived from the Spaak method.