european union established in accordance with masstricht treaty (1993) 27 countries motto: unity in...
DESCRIPTION
Eurozone Objectives –Price Stability –Financial Stability –Financial Integration 16 participating countries –Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Spain Eight more countries will be inducted when they meet the criteriaTRANSCRIPT
European Union• Established in accordance with Masstricht Treaty
(1993)
• 27 countries– Motto: Unity in Diversity
• Four Freedoms– People– Goods– Services– Capital
Eurozone• Objectives
– Price Stability– Financial Stability– Financial Integration
• 16 participating countries– Austria, Belgium, Cyprus, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Spain
• Eight more countries will be inducted when they meet the criteria
Criteria• Inflation
– No more than 1.5 percent higher than average of the three lowest members
• Government Finance– Ratio of gov. defecit to GDP may not exceed 3 percent– Ratio of gov. debt to GDP may not exceed 60 percent
• Exchange Rate– Must be a member of ERM II for two years
• Interest Rates– Long-term rate cannot be more than two percent higher
than three lowest inflation members
Eurosystem• Governing monetary authority
• Price Stability; Financial Stability; Financial Integration
• European Central Bank (ECB)– Manages & administers euro
• National Banks– Prints, mints, and distributes notes and coins
The Euro• Non-physical release on January 1, 1999• Rates were locked in the day before• Actual notes and coins released January 1, 2002
• Epsilon– Double strikethrough denotes stability
• Placement of the sign isn’t definitive
A Few Benefits
• Low Inflation Rates
• Ease of Trade
• Governmental Influence
• International Risk Sharing