Monday, 20 October 2008

Euro banknotes and coins Id: Article 106 TEC and euro area

The euro currency was launched on 1 January 1999, but seeing is believing, so for most EU citizens the single currency became a concrete reality when the euro banknotes and coins entered into circulation on 1 January 2002 in initially eleven member states, plus Greece.

Since the beginning of 2002 the euro replaced the national currencies in circulation in Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

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Only three members of the then European Union (EU-15) remained outside the eurozone:

Denmark and the United Kingdom kept their national currencies pursuant to their opt-outs.

In the consolidated treaties:

Protocol (No 26) on certain provisions relating to Denmark, which acknowledged the Danish exemption from participation in the third stage of economic and monetary union (one of the four Maastricht opt-outs by Denmark); OJ 29.12.2006 C 321 E/302.

Protocol (No 25) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, where the member states recognised that the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its government and parliament, and set out the procedures and limitations caused by the UK opt-out; OJ 29.12.2006 C 321 E/299─301.



Sweden was technically disqualified (but in reality outside Euroland following a national referendum arranged as if it was legitimate to decide freely if the country was going to fulfil its treaty obligation to enter the third stage of economic and monetary union, EMU).

Sweden has not even bothered to use the latest accession treaties or the Treaty of Lisbon to negotiate an opt-out, although the government seems to be in no hurry even to start a debate, and Swedish popular opinion remains reticent, but possibly a bit more receptive since the financial turmoil hit Europe.

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In the latest consolidated version of the treaties, you find the convergence criteria in: Protocol (No 21) on the convergence criteria referred to in Article 121 of the Treaty establishing the European Community, with the following criteria defined: price stability(inflation), government budgetary position (deficit and debt), participation in the exchange-rate mechanism (without devaluation) and convergence of interest rates (with reference to best-performing member states); OJ 29.12.2006 C 321 E/295─296.

The convergence criteria (or Maastricht criteria) are used to assess member states applying to enter the third stage of economic and monetary union (EMU).

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Enlargement

The so called big bang enlargement of the European Union took place on 1 May 2004, when ten new members joined the EU; the accession agreement concerning the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (OJ 23.9.2003 L 236).

The new member states are under an obligation to introduce the euro currency, when they fulfil the criteria, but initially the single currency (for the EU) became more of a fiction, relatively speaking, since only a minority twelve out of 25 member states had adopted the euro. (In economic terms, it is a different story.)

The two latest entrants are Bulgaria and Romania, from 1 January 2007. See the Treaty concerning the accession of the Republic of Bulgaria and Romania to the European Union, OJ 21.6.2005 L 157.

On the other hand, on 11 July 2006, the Council of the European Union approved Slovenia’s application to join the euro area in 2007, making Slovenia the first of the ten countries that joined the European Union on 1 May 2004 to adopt the euro:

http://www.ecb.int/bc/euro/changeover/slovenia/html/index.en.html

Plus one, but minus two: The euro banknotes were legal tender in 13 of 27 member states from 1 January 2007, still a minority position.

A slight majority was reached from the beginning of 2008, 15 of 27 member states. On 10 July 2007, the Council of the European Union approved the applications of Malta and Cyprus to join the eurozone from 1 January 2008:

http://www.ecb.int/bc/euro/changeover/malta/html/index.en.html

http://www.ecb.int/bc/euro/changeover/cyprus/html/index.en.html

In a little more than two months, the euro area is going to expand to 16 member states. On 8 July 2008 the Council of the European Union approved Slovakia’s application to join the euro area on 1 January 2009:

http://www.ecb.int/bc/euro/changeover/slovakia/html/index.en.html

From the beginning of next year, the euro will be the currency shared by about 325 million EU citizens.


Ralf Grahn