The Economic and Monetary Union (EMU) is an umbrella term for the group of policies aimed at converging the economies of member states of the European Union.
The decision to form an EMU 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).
The Economic and Monetary Union takes the EU one step further in its process of economic integration, which started in 1957 when it was founded.
Economic integration brings the benefits of greater size, internal efficiency, and robustness to the EU economy as a whole and the economies of the individual Member States.
This, in turn, offers opportunities for economic stability, higher growth, and more employment outcomes of direct benefit to EU citizens.
History of the European Monetary Union (EMU)
Efforts to form a European Economic and Monetary Union started after World War I. In 1929, Gustav Stresemann called for a common European currency at a League of Nations assembly. Sadly, the Great Depression, which began soon after, halted these plans and worsened Europe’s political divisions, leading to World War II.
In 1950, Robert Schuman, the French Foreign Minister, proposed a unified Europe to prevent further wars. His speech led to the creation of the European Coal and Steel Community (ECSC) in 1951. The ECSC later became part of the European Economic Community (EEC) under the Treaties of Rome.
Despite early efforts, plans for a united Europe faced challenges due to global economic instability in the 1960s and 1970s. However, in 1988, Jacques Delors, the President of the European Commission, proposed further integration. This led to the Maastricht Treaty in 1992, establishing the European Union (EU).
The Maastricht Treaty aimed for economic unity among EU countries and set the stage for the Economic and Monetary Union (EMU). The EMU included a common currency and central banking system. In 1998, the European Central Bank (ECB) was formed, and in 2002, the euro currency started circulating after fixed conversion rates between member states’ currencies were established.
FAQs
Not all European countries use the euro as their currency. Countries like the U.K., Switzerland, Sweden, Norway, Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, and Romania have kept their currencies instead. Additionally, some places outside the EU like Vatican City, Andorra, Monaco, and San Marino have agreements with the EU letting them use the euro under specific rules.
The European Union (EU) is a group of 27 countries that work together on political and economic goals. They all believe in democracy and share similar values. Out of these countries, eight don’t use the euro, which is the common currency. This leaves 19 countries in the eurozone, where they all use the euro currency.
The EMU (Economic and Monetary Union) officially started on February 7, 1992, when the Maastricht Treaty was signed in the Netherlands. The euro currency itself began on January 1, 1999, initially as a unit of account. Coins and banknotes started being used on January 1, 2002.