Eurozone: Difference between revisions
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===Membership rules=== | ===Membership rules=== | ||
The original version of the membership rules in the Mastricht Treaty (The Stability and Growth Pact<ref>[http://europa.eu/legislation_summaries/economic_and_monetary_affairs/stability_and_growth_pact/index_en.htm ''Stability and growth pact and economic policy coordination'', Europa 2010]</ref> | The original version of the membership rules in the Mastricht Treaty (The Stability and Growth Pact<ref>[http://europa.eu/legislation_summaries/economic_and_monetary_affairs/stability_and_growth_pact/index_en.htm ''Stability and growth pact and economic policy coordination'', Europa 2010]</ref> | ||
<ref>[http://ec.europa.eu/economy_finance/sg_pact_fiscal_policy/index_en.htm?cs_mid=570 ''Stability and Growth Pact'', European Commission 2009]</ref>, ) set the same limits upon member countries' budget deficits and levels of national debt. Following multiple breaches of those limits, | <ref>[http://ec.europa.eu/economy_finance/sg_pact_fiscal_policy/index_en.htm?cs_mid=570 ''Stability and Growth Pact'', European Commission 2009]</ref>, ) set the same limits upon member countries' budget deficits and levels of national debt. Following multiple breaches of those limits by several member countries including Germany and France<ref>[http://stajano.deis.unibo.it/UP2006/6.EMU/Pact.pdf ''Stability and growth pact: implementation and key figures'',Europa, 2005]</ref> the pact was been renegotiated. | ||
The revised agreement<ref>[http://ec.europa.eu/economy_finance/sgp/pdf/coc/2009-11-19_code_of_conduct_(consolidated)_en.pdf ''Specifications on the implementation of the Stability and Growth Pact and Guidelines on the format and content of Stability and Convergence Programmes'']</ref> treats a budget deficit not greater than 3 per cent of GDP, and a public debt not greater than 60 per cent of GDP as targets rather than permitted limits, and provides for: | |||
: - a "medium term budgetary objective" for each member country that specifies margins within which the target values may be exceeded; | |||
: - an adjustment path for return to the target levels; | |||
: - procedures for determining and revising the country's budgetary objectives and adjustment paths: and, | |||
<ref>[http://ec.europa.eu/economy_finance/sgp/pdf/coc/2009-11-19_code_of_conduct_(consolidated)_en.pdf ''Specifications on the implementation of the Stability and Growth Pact and Guidelines on the format and content of Stability and Convergence Programmes'' | : - an "excessive deficit procedure", prescribing the actions required of a country whose deficit is deemed to be excessive. | ||
===Members=== | ===Members=== | ||
Revision as of 08:27, 7 December 2010
Overview
The European Economic and Monetary Union
The decision to form an Economic and Monetary Union was taken by the European Council in December 1991, and was given legislative effect by the Maastricht Treaty of 1992.
Its principal features are:
- - the adoption of the euro as its members' the single currency;
- - the coordination of its members' fiscal policies, by the adoption of agreed limits on the magnitudes of their public debt and their budget deficits; and,
- - the operation of a common monetary policy under the management of a single Central Bank.
Its principal institutions are:
- - the European Council, which sets its main policy directions;
- - the Council of the European Union which coordinates its policy and decides whether to admit new members;
- - the European Commission, which monitors compliance with its membership rules; and,
- - the European Central Bank, which determines its monetary policy.
Membership
Entry criteria
The criteria[1] for eurozone membership set out in the Maastricht Treaty were:
- - an inflation rate not exceeding by more than 1.5% that of the three best-performing Member States;
- - a general government budget deficit not exceeding 3% of GDP and a public debt of less than 60% of GDP;
- - a long-term interest rate not exceeding by more than 2% that of the three best-performing Member States; and,
- - a stable exchange rate.
Membership rules
The original version of the membership rules in the Mastricht Treaty (The Stability and Growth Pact[2] [3], ) set the same limits upon member countries' budget deficits and levels of national debt. Following multiple breaches of those limits by several member countries including Germany and France[4] the pact was been renegotiated.
The revised agreement[5] treats a budget deficit not greater than 3 per cent of GDP, and a public debt not greater than 60 per cent of GDP as targets rather than permitted limits, and provides for:
- - a "medium term budgetary objective" for each member country that specifies margins within which the target values may be exceeded;
- - an adjustment path for return to the target levels;
- - procedures for determining and revising the country's budgetary objectives and adjustment paths: and,
- - an "excessive deficit procedure", prescribing the actions required of a country whose deficit is deemed to be excessive.
Members
Consequences of membership
The financial crisis of 2010
Prospect
References
- ↑ The road to the euro area, Europa
- ↑ Stability and growth pact and economic policy coordination, Europa 2010
- ↑ Stability and Growth Pact, European Commission 2009
- ↑ Stability and growth pact: implementation and key figures,Europa, 2005
- ↑ Specifications on the implementation of the Stability and Growth Pact and Guidelines on the format and content of Stability and Convergence Programmes