The Euro
On January 1, 2002, more than 300 million European citizens saw the euro turn from a virtual currency into reality. The entry into circulation of euro notes and coins means that European Monetary Union (EMU), a project devised by Europe's political elite over more than a generation, finally came down to the street. The psychological and economic consequences of the launch of Europe's single currency will be far-reaching. It will mark the final break from national currencies, promising a cultural revolution built on stable prices, enduring fiscal discipline, and lower interest rates. The origins of the euro go back to the late 1960s, when the Europeans were searching for a response to the upheaval in the Bretton Woods system, in which the US dollar was the dominant currency. The first step came at the Hague summit in 1969 when t the founders of the European Union (France, Germany, Italy, Belgium, Luxembourg, and the Netherlands) ordered a feasibility study on monetary union. The goal of a single currency had been mentioned obliquely in the 1957 Treaty of Rome, the Union's founding treaty. But it took an inspirational intervention in 1970 from Pierre Werner, Luxembourg's prime minister, to produce a three-stage plan for ach . . .
The euro zone defused its first potential major crisis earlier in the year after it became clear that Germany's budget deficit in 2002 is moving toward breaching the ceiling of 3 percent of GDP that could trigger massive fines running into billions of euros under the EU's Stability and Growth Pact. Its weakness helped German exports grow by 5. The German government took the fateful decision to pay for the spiraling costs of unification not through higher taxes but through borrowing. Using the same currency across most of Europe, coupled with moves to harmonize prices, will allow the firm to halve the number of European warehouses, which, added to lower costs for administration and handling orders, could deliver savings up to $263 million a year. 2 percent forecast, which is backed by private economists. It was a less than perfect deal that took some of the gloss off the launch of the euro on January 1, 1999. In May 1998, the heads of government decided that eleven countries, France, Germany, Austria, Belgium, the Netherlands, Luxembourg, Finland, Ireland, Italy, Spain, and Portugal, had met the Maastricht criteria. The Stability Pact has already been tweaked to take more account of the economic cycle. For Italy, however, with its huge public debt and its rocky record in the management of public finances, it was an historic achievement. 3 percent in 2002 following an estimated gain of 1. 5 percent, while Germany and France, the two largest economies, are in danger of heading back toward 10 percent. Worse, Germany, the euro zone's locomotive economy accounting for a third of its output, turned in the worst performance, growing a miserly 0. Some countries only squeezed into the EMU club thanks to a liberal interpretation of the entry criteria. Between 1993-98, all countries in the EU made a formidable effort to restore their public finances in order to meet the Maastricht Treaty's entry criteria for economic and monetary union.
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Acceptance Essays
