Used by 17 of 27 countriesUsed for all payments starting in 2002Should be used by all countries once they join

THE EURO

First Stage, which began on 1 July 1990Completely free movement of capital

within the EUStep up efforts to remove inequalities

between European regions

THE THREE STAGES

Setting up the European Monetary Institute (EMI) in Frankfurt

Made up of the governors of the central banks of the EU countries

Making (or keeping) national central banks independent of government control

Introducing rules to curb national budget deficits

2ND STAGE BEGAN ON 1 JAN 1994

1 January 1999 to 1 January 2002Euro was phased in as the common currency

of EU countries that participated (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain)

Three countries (Denmark, Sweden and the United Kingdom) decided, for political and technical reasons, not to adopt euro

Slovenia joined in 2007, followed by Cyprus and Malta in 2008 Slovakia in 2009 and Estonia in 2011

3RD STAGE-BIRTH OF EURO

Each EU country must meet the following five convergence criteria:

1. Price stability: the rate of inflation may not exceed by more than 1.5 % the average rates of inflation of the three member states with the lowest inflation.

2. Interest rates: long-term interest rates may not vary by more than 2 % in relation to the average interest rates of the three member states with the lowest interest rates.

3. Deficits: national budget deficits must be below 3 % of GDP.

4. Public debt: this may not exceed 60 % of GDP.5. Exchange rate stability: exchange rates must have

remained within the authorized margin of fluctuation for the previous two years.

HOW DO “I” JOIN THE EURO?

Travelers do not have to change currenciesShoppers can directly compare prices in

diff erent countriesPrices are stable thanks to the European

Central Bank, whose job it is to maintain this stability

During the 2008 financial crisis, having a common currency protected euro-area countries from competitive devaluation and from attack by speculators

THE PROS

The structural weakness of some member states’ economies

To counter this risk, the EU institutions & the 27 member states decided, on 9 May 2010, to set up a ‘financial stabilization mechanism’ worth € 750 billion.

The key issue for the future is how to achieve closer coordination & greater economic solidarity between the member states, which need to ensure good governance of their public finances and to reduce their budget deficits.

THE CONS