The euro is the official currency of 20 of the 27 member states of the European Union. This group of states is officially known as the euro area or, more commonly, the eurozone. The euro is divided into 100 euro cents.
The Treaty on European Union, commonly known as the Maastricht Treaty, is the foundation treaty of the European Union (EU). Concluded in 1992 between the then-twelve member states of the European Communities, it announced "a new stage in the process of European integration" chiefly in provisions for a shared European citizenship, for the eventual introduction of a single currency, and for common foreign and security policies, and a number of changes to the European institutions and their decision taking procedures, not least a strengthening of the powers of the European Parliament and more majority voting on the Council of Ministers. Although these were seen by many to presage a "federal Europe", key areas remained inter-governmental with national governments collectively taking key decisions. This constitutional debate continued through the negotiation of subsequent treaties, culminating in the 2007 Treaty of Lisbon.
The euro area, commonly called the eurozone (EZ), is a currency union of 20 member states of the European Union (EU) that have adopted the euro (€) as their primary currency and sole legal tender, and have thus fully implemented EMU policies.
A trade agreement is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common trade agreements are of the preferential and free trade types, which are concluded in order to reduce tariffs, quotas and other trade restrictions on items traded between the signatories.
The European System of Central Banks (ESCB) is an institution that comprises the European Central Bank (ECB) and the national central banks (NCBs) of all 27 member states of the European Union (EU). Its objective is to ensure price stability throughout the EU, and improve monetary and financial cooperation between eurozone and non-eurozone member states of the EU.
The European Union has a number of relationships with foreign states. According to the European Union's official site, and a statement by Commissioner Günter Verheugen, the aim is to have a ring of countries, sharing EU's democratic ideals and joining them in further integration without necessarily becoming full member states.
The five economic tests were the criteria defined by the UK treasury under Gordon Brown that were to be used to assess the UK's readiness to join the Economic and Monetary Union of the European Union (EMU), and so adopt the euro as its official currency. In principle, these tests were distinct from any political decision to join.
European integration is the process of industrial, economic, political, legal, social, and cultural integration of states wholly or partially in Europe, or nearby. European integration has primarily but not exclusively come about through the European Union and its policies.
A currency union is an intergovernmental agreement that involves two or more states sharing the same currency. These states may not necessarily have any further integration.
In economics, an optimum currency area (OCA) or optimal currency region (OCR) is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency.
The euro came into existence on 1 January 1999, although it had been a goal of the European Union (EU) and its predecessors since the 1960s. After tough negotiations, the Maastricht Treaty entered into force in 1993 with the goal of creating an economic and monetary union (EMU) by 1999 for all EU states except the UK and Denmark.
Denmark uses the krone as its currency and does not use the euro, having negotiated the right to opt out from participation under the Maastricht Treaty of 1992. In 2000, the government held a referendum on introducing the euro, which was defeated with 53.2% voting no and 46.8% voting yes. The Danish krone is part of the ERM II mechanism, so its exchange rate is tied to within 2.25% of the euro.
The Economic and Financial Affairs Council (ECOFIN) is one of the oldest configurations of the Council of the European Union and is composed of the economics and finance ministers of the 27 European Union member states, as well as Budget Ministers when budgetary issues are discussed.
An economic union is a type of trade bloc which is composed of a common market with a customs union. The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production as well as a common external trade policy. When an economic union involves unifying currency, it becomes an economic and monetary union.
The economic and monetary union (EMU) of the European Union is a group of policies aimed at converging the economies of member states of the European Union at three stages.
Fiscal union is the integration of the fiscal policy of nations or states. In a fiscal union, decisions about the collection and expenditure of taxes are taken by common institutions, shared by the participating governments. A fiscal union does not imply the centralisation of spending and tax decisions at the supranational level. Centralisation of these decisions would open up not only the possibility of inherent risk sharing through the supranational tax and transfer system but also economic stabilisation through debt management at the supranational level. Proper management would reduce the effects of asymmetric shocks that would be shared both with other countries and with future generations. Fiscal union also implies that the debt would be financed not by individual countries but by a common bond.
A customs and monetary union is a type of trade bloc which is composed of a customs union and a currency union. The participant countries have both common external trade policy and share a single currency.
Within the framework of EU economic governance, Sixpack describes a set of European legislative measures to reform the Stability and Growth Pact and introduces greater macroeconomic surveillance, in response to the European debt crisis of 2009. These measures were bundled into a "six pack" of regulations, introduced in September 2010 in two versions respectively by the European Commission and a European Council task force. In March 2011, the ECOFIN council reached a preliminary agreement for the content of the Sixpack with the commission, and negotiations for endorsement by the European Parliament then started. Ultimately it entered into force 13 December 2011, after one year of preceding negotiations. The six regulations aim at strengthening the procedures to reduce public deficits and address macroeconomic imbalances.
Withdrawal from the Eurozone denotes the process whereby a Eurozone member-state, whether voluntarily or forcibly, stops using the euro as its national currency and leaves the Eurozone.
