Eurozone: history of creation

The new settlement currency - the euro - was first introduced in 1999. As from 01.01.2002, this payment instrument was issued for cash circulation in the form of the corresponding coins and banknotes. To date, the euro area includes countries such as Austria and Belgium, Germany and Greece, Ireland and Spain, Italy and Cyprus, Luxembourg and Malta, the Netherlands and Portugal, Slovakia and Slovenia, France, Finland and Estonia. On the territory of these 17 states there is a single currency.

The value of the

The main task of the European Union is to create a single economic space that is able to provide some financial support among its member states. To achieve this goal, the euro area was created.

Striving for integration

The currency zone of the euro was a grandiose project of the 20th century. At the same time, the implementation of the conceived, without any doubt, had global political and economic consequences, becoming one of the most difficult stages of the integration process in the territory of Western Europe.

A single internal market existed in the EU since 1993. However, its functioning could not be successful. The fact is that at that time the countries of the European Union had their own national monetary systems, differing from each other by fluctuations in rates, taxes and price levels. With such a state of affairs about full-fledged economic integration, there could not even be a speech. To eliminate all these obstacles, the euro zone was created. The economy of all the countries included in it has become much more profitable due to the free movement of services, goods, capital and, of course, labor.

Unified budgetary discipline has become a more progressive direction and at the macroeconomic level. The EU countries have united their money markets under the control and supervision of supranational financial institutions. This made it possible to more reliably fight inflationary processes, reduce tax payments and interest rates. The given process promoted growth of employment and manufacture, and also became a basis of stability of the state money resources.

The role of the euro area is also great for all economic entities. Indeed, the single currency and monetary policy existing on the EMU territory means for companies reduction of financial and price risks, as well as expenses for settlement services. With the advent of the euro for all countries of the monetary union, a single monetary regulation began to be implemented. This led to a decrease in the need for working capital.

The history of the unification of European monetary systems

Is the idea of creating the euro so young? Not at all. Attempts to unify the monetary systems of various states were made back in those days when the first coins appeared. Thus, monetary unions were concluded between the ancient Greek city-states. The coins they issued freely traveled throughout the country.

The largest attempt to create a common monetary system is the organization of a trade and political association of Baltic cities. In the 13th and 16th centuries. They were in the Hanseatic League. In different periods in this community, from 70 to 170 subjects participated.

Attempts to merge into one several monetary systems continued in the future. So, in the first half of the 19th century. A number of projects were implemented to integrate various monetary systems within existing or newly created countries.

In the second half of the 19th century. In Latin and Scandinavian monetary unions arose. Within their borders, money circulation began to be implemented on a completely different basis.

The prototype of the euro area is the Latin Monetary Union, created in December 1865 by countries such as France and Italy, Belgium and Switzerland. After the war with Napoleon, the monetary systems of these states were similar to each other. Three years later, Greece joined the Latin Union.

Background of the European Union

Integration processes between states significantly accelerated their pace after the end of World War II. It was her lessons and tremendous destructive consequences that allowed the rebirth of an understanding about the prevention of the growth of nationalism in European countries. Another prerequisite for accelerating the integration process was the desire of states to strengthen their shaken economic positions. The defeated Germany sought first of all to restore its own international prestige and political positions. In addition, the countries of Western Europe wanted to unite to contain the world influence of the USSR.

The origins of the integration process

How did the unification of Europe begin? The starting point of the integration process is the declaration of French Foreign Minister Robert Schumann. This document, published on May 9, 1950, contained a proposal for the establishment of the ECSC (European Coal and Steel Community). This treaty was signed by the FRG, France, Belgium, Italy, Luxembourg and the Netherlands. Integration of this important sector for the economy opened prospects for further development of this process in other areas.

In the following stages, the European Economic Community (25.03.1957) was established, as well as the European Atomic Energy Community.

Documents regulating the circulation of a single currency

In 1962, the EU issued a memorandum, which first spoke of the importance of creating a unified European financial policy. It was the idea of a "currency snake", which was a fixation of exchange rates in all countries, contained within certain limits. However, the plan was not implemented soon. The fault was the 1972 energy crisis, during which oil prices rose significantly.

The prototype of the euro was introduced only in 1979. It was then that an agreement was signed between the central banks of the EU on the marginal limits of exchange rate fluctuations. In the future, the idea of creating the eurozone was developed in the Maastricht Treaty (1992) and the Single European Act (1986). These documents determined the basis for the emergence of a single currency, the timetable for its introduction, as well as the rules for the state budget of members of the newly created union.

Stability criteria

How can the state enter the eurozone? For this, it must meet the following criteria:

• Differ in the stability of the exchange rate;
• Have a certain level of prices;
• Have a viable financial system.

Why is the euro zone so demanding for its members? Compliance with the above criteria will allow any country not only to enjoy the achievements of a common for all economic space, but also itself to bring a certain amount of positive contribution to it. Only in this case, the euro area is able to obtain a balanced development of its economic sphere. All these stringent criteria for stability were enshrined in the Maastricht Agreements.

Creation of a financial institution

Who is administering the euro? This function is vested in the European Monetary Institute, which is located in Frankfurt am Main. The document on the establishment of this institution was signed in 1994. At that time the European Monetary Institute was called upon to lead the project of creating the euro and observe the economic processes taking place in the EU countries.

Officially, the transition to a single currency was announced at a summit held in Madrid in late 1995. At the same time, new banknotes also received their name - the "euro."

The appearance of a new currency

The countries that are part of the euro area began to use the new monetary unit since 01.01.2002. On that day, Belgian and French francs, Irish pounds, Finnish and German brands, Spanish pesetas and Italian lira, Austrian schillings, Portuguese escudos were withdrawn from circulation. And the Dutch guilders.

But these countries are no longer limited to the euro area. Countries in Europe, not included in the initial list, constantly sought to raise their economic performance. So, to meet the necessary criteria only since 2006 was Slovenia. Since that period, it has also entered the euro area. Since 01.01.2008, Cyprus and Malta have appeared on the list, and since 2009 - Slovakia.

Settlement system

The most important element that has the euro area is the Trans-European Automatic System. It allows all business entities to make calculations online. The work of this system began to be carried out simultaneously with the introduction of Eurocurrency. This made it possible to significantly shorten the time required for payments between subjects of different countries.

The economic impact of the new currency

The euro zone, created in the EU, has given the countries entering it considerable weight in the world market. And all this is due to the fact that the cumulative share of goods produced in the states of the European Union is equal to one-third of the world's total. And for companies cooperating with the EU, the emergence of the euro gave the opportunity to work in a single currency area, which reduced their costs for performing payment transactions in trade in services and goods.

The new currency has allowed to form a single, larger capital market. That is why the euro is less exposed to the negative impact of fluctuations in the dollar exchange rate than any national currency. All this became a prerequisite for the reorientation of the international flow of capital.

The problems of today

In the euro area, there are seven economies experiencing significant difficulties. They can be observed in countries such as Ireland and Greece, Spain and Portugal, Slovenia, Cyprus and Italy. All of the above states have many private and public debts.

What else is the euro zone facing now? The problems of this economic territory are connected with the imbalance of cash flows, loss and lack of competitiveness and recession. All this finds expression in the growing deficit of trade balances.

The most important problem of the eurozone is recession. This process gradually penetrates into the most economically developed countries of Europe. For example, France is on the verge of recession. Germany is experiencing a sharp slowdown in economic growth.

Fan Zones

Despite economic difficulties, sports cooperation between European countries does not cease. In the states located on the European continent, numerous matches are held on football and hockey. For the convenience of fans, a so-called fan zone is created. Euro-2016, for example, at such venues could see hundreds of football fans.

At the same time, for those who were in the fan zone, various master classes worked, meetings were held with various celebrities, training was conducted for the "football" language, etc.