THE EUROPEAN MONETARY UNION
THE EUROPEAN MONETARY UNION

Summary/Abstract: European integration that includes common economic and monetary policy came through long-lasting evolutionary process. Passing though different steps free trade zone, customs union, common market, single market, monetary union with a single monetary policy and a single currency, it moves into one broad economic union that will deepen the cooperation between the European countries. Foundation of the European monetary union (EMU) required creation of the institution and mechanisms for managing and applying a single monetary policy at the euro area as far as running the euro exchange rate policy. The EMU was achieved in three steps: stage one, that has goals to complete freedom of capital movement and increased co-operation between central banks stage two, during which the European monetary institute (EMI) was established, and introduced ban on the granting central bank credit to the public sector, process leading to independence of national central banks; and stage three, that formally started on 1 January 1999 when the European central bank (ECB) started to operate, marked with beginning of use of a single currency - euro in a daily life (euro denominated banknotes and coins are put into circulation on 1 January 2002). Moment when euro banknotes and coins entered in circulation is a great landmark in the European history. Euro is not only legal tender, but much more. It is a cohesion factor that contributes to creation of feeling that all nations are belonging to the European family and European civilization.

• Details
• Contents