EMU Today

The euro is the single currency shared by (currently) 17 of the European Union's (EU) Member States, which together make up the euro area.

Economic and Monetary Union (EMU) is the highest stage of the EU member states' economic integration. This is also the key instrument for achieving basic goals of the EU economic policy - stable growth and low inflation.

EMU means:

• The single currency and the euro area;

• An independent monetary policy run by the European Central Bank (ECB) together with central banks of euro area countries. It is mainly targeted at price stabilisation;

• Coordination of economic and fiscal policy-making between Member States.

The euro area enlarges gradually - more and more EU Member States introduce the euro. To introduce the euro EU Member States with a derogation (i.e. not participating in the euro area) have to satisfy conditions to adopt the single currency or the so called "Maastricht criteria".

The decision to form an Economic and Monetary Union was taken by the European Council in the Dutch city of Maastricht in December 1991, and was later enshrined in the Treaty on European Union (the Maastricht Treaty) which also set requirements for accession to the EMU. In practical terms, EMU means that:

1. Inflation rate should be no more than 1.5 percentage points above the rate for the three EU countries with the lowest inflation over the previous year;

2. Budget deficit must generally be below 3% of gross domestic product (GDP);

3. National debt should not exceed 60% of GDP;

4. Long terms rate should not be more than two percentage points above the rate in the three EU countries with the lowest inflation over the previous year;

5. National currency's exchange rate should have stayed within +/-15% margins set within the Exchange Rate Mechanism II fluctuation for two years before joining the euro area.

Single European currency was first introduced on 1 January 1999 as a virtual currency for cash-less payments and accounting purposes. Three years later, on 1 January 2002, it appeared in physical form, as banknotes and coins, gradually replacing the old national currencies. Now the euro can be used without restrictions for settling payments in all euro-area countries.

Although the euro is comparatively new currency, it has rapidly become the second most important international currency after the US dollar.

On 1 January 2002 the euro was launched in 12 EU Member States:

• Austria
• Belgium
• France
• Greece
• Ireland
• Italy
• Luxemburg
• The Netherlands
• Portugal
• Finland
• Spain
• Germany

On 1 January 2007 the euro-area was joined by

• Slovenia

On 1 January 2008 cash euro was introduced in:

• Cyprus
• Malta

On 1 January 2009 national currency was changed to the euro by

• Slovakia

On 1 January 2011 the euro was implemented in

• Estonia

Today, the euro area numbers 17 EU Member States. Of the Member States outside the euro area, Denmark and the United Kingdom have 'opt-outs' from joining, although they can join in the future if they so wish. Sweden has not yet qualified to be part of the euro area.

Bulgaria, Czech Republic, Hungary, Latvia, Lithuania, Poland, Bulgaria and Romania are also candidates for implementation of the euro.

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