EURO

The creation of a European single currency became an official objective of the Europena Union in 1969. However, it was only with the Maastricht Treaty in 1993 that member states were legally bound to start the monetary union no later than 1 January 1999. On this date the euro was duly launched by eleven of the then fifteen member states of the EU. It remained an accounting currency until 1 January 2002, when euro notes and coins were issued and national currencies began to phase out in the eurozone, which by then consisted of twelve member states. The eurozone has since grown to sixteen countries, the most recent being Slovakia which joined on 1 January 2009.

The euro (€) is the official currency of 16 of the 27 member states of the European Union (EU). The states, known collectively as the Eurozone, are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The currency is also used in a further five European countries, with and without formal agreements and is consequently used daily by some 327 million Europeans. A number of other countries outside the EU, such as Montenegro, use the euro without formal agreement with the ECB. Over 175 million people worldwide use currencies which are pegged to the euro, including more than 150 million people in Africa.

The euro is the second largest reserve currency and the second most traded currency in the world after the U.S. dollar. As of November 2008, with more than €751 billion in circulation, the euro is the currency with the highest combined value of cash in circulation in the world, having surpassed the U.S. dollar. Based on IMF estimates of 2008 GDP and purchasing power parity among the various currencies, the Eurozone is the second largest economy in the world.

The name euro was officially adopted on 16 December 1995. The euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit (ECU) at a ratio of 1:1. Euro coins and banknotes entered circulation on 1 January 2002.

The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone. It is also intended as a political symbol of integration and stimulus for more.

The euro, and the monetary policies of those who have adopted it in agreement with the EU, are under the control of the European Central Bank (ECB). There are eleven other currencies used in the EU.

Administration

The European Central Bank (ECB) in Frankfurt, Germany, is in charge of the Eurozone's monetary policy. The euro is managed and administered by the ECB and the Eurosystem (composed of the central banks of the Eurozone countries). As an independent central bank, the ECB has sole authority to set monetary policy. The Eurosystem participates in the printing, minting and distribution of notes and coins in all member states, and the operation of the Eurozone payment systems.

The 1992 Maastricht Treaty obliges most EU member states to adopt the euro upon meeting certain monetary and budgetary requirements, however, not all states have done so. The United Kingdom and Denmark negotiated exemptions, while Sweden turned down the euro in a 2003 referendum, and has circumvented the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All nations that have joined the EU since 1993 have pledged to adopt the euro in due course.

Characteristics

All euro coins have a common side, and a national side chosen by the respective national authorities.

The euro is divided into 100 cents (sometimes referred to as euro-cents, especially when distinguishing them from other currencies). In official contexts the plural forms of euro and cent are spelled without the s, notwithstanding normal English usage. Otherwise, normal English plurals are recommended and used. All circulating coins have a common side showing the denomination or value, and a map in the background. For the denominations except the 1-, 2- and 5-cent coins that map only showed the 15 member states which were members when the euro was introduced. Beginning in 2007 or 2008 (depending on the country) the old map is being replaced by a map of Europe also showing countries outside the Union like Norway. The 1-, 2- and 5-cent coins, however, keep their old design, showing a geographical map of Europe with the 15 member states of 2002 raised somewhat above the rest of the map. All common sides were designed by Luc Luycx. The coins also have a national side showing an image specifically chosen by the country that issued the coin. Euro coins from any member state may be freely used in any nation which has adopted the euro.

The coins are issued in €2, €1, 50-cent, 20-cent, 10-cent, 5-cent, 2-cent, and 1-cent denominations. In order to avoid the use of the two smallest coins, some cash transactions are rounded to the nearest five cents in the Netherlands (by voluntary agreement) and in Finland (by law).

Commemorative coins with €2 face value have been issued with changes to the design of the national side of the coin. These include both commonly issued coins, such as the €2 commemorative coin for the fiftieth anniversary of the signing of the Treaty of Rome, and nationally issued coins, such as the coin to commemorate the 2004 Summer Olympics issued by Greece. These coins are legal tender throughout the Eurozone. Collector’s coins with various other denominations have been issued as well, but these are not intended for general circulation, and they are legal tender only in the member state that issued them.

The design for the euro banknotes has common designs on both sides. The design was created by Robert Kalina. Notes are issued in €500, €200, €100, €50, €20, €10, €5. Each banknote has its own colour and is dedicated to an artistic period of European architecture. The front of the note features windows or gateways while the back has bridges. Some of the highest denominations such as the €500 are not issued in all countries, though they remain legal tender throughout the Eurozone.

Payments clearing, electronic funds transfer

All intra-EU transfers in euro are considered as domestic payments and bear the corresponding domestic transfer costs. This includes all member States of the EU, even those outside the Eurozone providing the transactions are carried out in euro. Credit/debit card charging and ATM withdrawals within the Eurozone are also charged as domestic, however paper-based payment orders, like cheques, have not been standardised so these are still domestic-based. The ECB has also set up a clearing system, TARGET, for large euro transactions.

Currency sign

A special euro currency sign (€) was designed after a public survey had narrowed the original ten proposals down to two. The European Commission then chose the design created by the Belgian Alain Billiet. Inspiration for the € symbol itself came from the Greek epsilon (Є) – a reference to the cradle of European civilisation – and the first letter of the word Europe, crossed by two parallel lines to ‘certify’ the stability of the euro.

Eurocurrency

Currency deposited by national governments or corporations in banks outside their home market. This applies to any currency and to banks in any country. For example, South Korean won deposited at a bank in South Africa, is considered Eurocurrency or euromoney. Having "euro" doesn't mean that the transaction has to involve European countries. However, in practice, European countries are often involved.

Eurocurrency Market

The money market in which Eurocurrency, currency held in banks outside of the country where it is legal tender, is borrowed and lent by banks in Europe. Thus, it is a market where financial and banking institutions provide banking services denominated in foreign currencies.

The Eurocurrency market allows for more convenient borrowing and lending, which improves the international flow of capital for trade between countries and companies. For example, a Japanese company borrowing U.S. dollars from a bank in France is using the Eurocurrency market. Unlike Eurocredit markets, however, loans in this market are made short-term.

------------------------------------------------------------------------------------------------------------

EUROPEAN UNION

The European Union (EU) is an economic and political union of 27 member states, located primarily in Europe. But the EU’s territory is not the same as that of Europe, as parts of Europe

Committed to regional integration, the EU was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the pre-existing European Economic Community.

[The EU has developed a single market through a standardised system of laws which apply in all member states, ensuring the freedom of movement of people, goods, services and capital. It maintains common policies on trade, agriculture, fisheries and regional development. A common currency, the euro, has been adopted by sixteen member states that are thus known as the Eurozone. The EU has developed a limited role in foreign policy, having representation at the WTO, G8 summits, and at the UN. It enacts legislation in justice and home affairs, including the abolition of passport controls between many member states which form part of the Schengen Area. Twenty-one EU countries are also members of NATO.]

An international organisation, the EU operates through a hybrid system of supranationalism and intergovernmentalism. In certain areas, it depends upon agreement between the member states; in others, supranational bodies are able to make decisions without unanimity. Important institutions and bodies of the EU include the European Commission, the Council of the European Union, the European Council, the European Court of Justice (ECJ), and the European Central Bank (ECB). The European Parliament is elected every five years by member states' citizens, to whom the citizenship of the European Union is guaranteed.

The EU traces its origins to the European Coal and Steel Community formed among six countries in 1951 and the Treaty of Rome in 1957. Since then the union has grown in size through the accession of new countries, and new policy areas have been added to the remit of the EU's institutions.

Member states
The European Union is composed of 27 independent sovereign states which are known as member states: [Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.]

To join the EU, a country must meet the Copenhagen criteria, defined at the 1993 Copenhagen European Council. These require a stable democracy which respects human rights and the rule of law; a functioning market economy capable of competition within the EU; and the acceptance of the obligations of membership, including EU law. Evaluation of a country's fulfilment of the criteria is the responsibility of the European Council. The current framework does not specify how a country could exit the Union (although Greenland, a territory of Denmark, withdrew in 1985), but the proposed Treaty of Lisbon contains a formal procedure for withdrawing.

History
After the end of the Second World War, moves towards European integration were seen by many as an escape from the extreme forms of nationalism which had devastated the continent. One such attempt to unite Europeans was the European Coal and Steel Community (1951) which was declared to be "a first step in the federation of Europe". The founding members of the Community were Belgium, France, Italy, Luxembourg, the Netherlands and West Germany.

In 1957, the "Six" mentioned before signed the Treaties of Rome. These treaties extended the earlier cooperation within the European Coal and Steel Community and created the European Economic Community, (EEC) establishing a customs union and the European Atomic Energy Community (Euratom) for cooperation in developing nuclear energy. In 1967 the Merger Treaty created a single set of institutions for the three communities, which were collectively referred to as the European Communities, although more commonly just as the European Community (EC).

[In 1973 the Communities enlarged to include Denmark, Ireland and the United Kingdom. In 1979 the first direct, democratic elections to the European Parliament were held. Greece joined in 1981, and Spain and Portugal in 1986. In 1985 the Schengen Agreement created largely open borders without passport controls between most member states. In 1986 the European flag began to be used by the Community and the Single European Act was signed. In 1990, after the fall of the Iron Curtain, the former East Germany became part of the Community as part of a newly united Germany.

The European Union was formally established when the Maastricht Treaty came into force on 1 November 1993, and in 1995 Austria, Sweden and Finland joined the newly established EU. In 2002, euro notes and coins replaced national currencies.]

Economy
Since its origin, the EU has established a single economic market across the territory of all its members. Currently, a single currency is in use between the 16 members of the eurozone. If considered as a single economy, the EU generated an estimated nominal gross domestic product (GDP) of US$18.39 trillion (15.247 trillion international dollars based on purchasing power parity) in 2008, amounting to over 22% of the world's total economic output in terms of purchasing power parity, which makes it the largest economy in the world by nominal GDP and the second largest trade bloc economy in the world by PPP valuation of GDP. It is also the largest exporter of goods, the second largest importer, and the biggest trading partner to several large countries such as India and China.

Single market (Four Freedoms)
Two of the original core objectives of the European Economic Community were the development of a common market, subsequently renamed the single market, and a customs union between its member states. The single market involves the free circulation of goods, capital, people and services within the EU, and the customs union involves the application of a common external tariff on all goods entering the market. Once goods have been admitted into the market they can not be subjected to customs duties, discriminatory taxes or import quotas, as they travel internally. The non-EU member states of Iceland, Norway, Liechtenstein and Switzerland participate in the single market but not in the customs union.

Free movement of capital is intended to permit movement of investments such as property purchases and buying of shares between countries. The free movement of capital is unique insofar as that it is granted equally to non-member states.

The free movement of persons means citizens can move freely between member states to live, work, study or retire in another country. This required the lowering of administrative formalities and recognition of professional qualifications of other states.

The free movement of services and of establishment allows self-employed persons to move between member states in order to provide services on a temporary or permanent basis. According to the Treaty the provision of services is a residual freedom that only applies if no other freedom is being exercised.

Monetary union
The creation of a European single currency became an official objective of the EU in 1969. However, it was only with the advent of the Maastricht Treaty in 1993 that member states were legally bound to start the monetary union no later than 1 January 1999. On this date the euro was duly launched by eleven of the then fifteen member states of the EU. It remained an accounting currency until 1 January 2002, when euro notes and coins were issued and national currencies began to phase out in the eurozone.

Competition
The EU operates a competition policy intended to ensure undistorted competition within the single market. The Commission as the competition regulator for the single market is responsible for antitrust issues, approving mergers, breaking up cartels, working for economic liberalisation and preventing state aid. However, it is unclear whether this will have any practical effect on EU policy.

Development
The Common Agricultural Policy (CAP) is one of the oldest policies of the European Community, and was one of its core aims. The policy has the objectives of increasing agricultural production, providing certainty in food supplies, ensuring a high quality of life for farmers, stabilising markets, and ensuring reasonable prices for consumers. It was, until recently, operated by a system of subsidies and market intervention. Until the 1990s, the policy accounted for over 60% of the then European Community's annual budget, and still accounts for around 35%.

[For WTO and its impact on the agriculture of developing countries: The EU’s policy of price controls and market interventions led to considerable overproduction. These were intervention stores of produce bought up by the Community to maintain minimum price levels. In order to dispose of surplus stores, they were often sold on the world market at prices considerably below Community guaranteed prices, or farmers were offered subsidies (amounting to the difference between the Community and world prices) to export their produce outside the Community. This system has been criticised for under-cutting farmers in the developing world. The overproduction has also been criticised for encouraging environmentally unfriendly intensive farming methods.]

Energy
The Commission has five key points in its energy policy: increase competition in the internal market, encourage investment and boost interconnections; diversify energy resources; establish a new treaty framework for energy co-operation with Russia while improving relations with energy-rich states in Central Asia and North Africa; use existing energy supplies more efficiently while increasing use of renewable energy; and finally increase funding for new energy technologies. The EU currently imports 82% of its oil, 57% of its gas and 97.48% of its uranium demands.

Infrastructure
The EU is working to improve cross-border infrastructure within the EU, for example through the Trans-European Networks (TEN). The developing European transport policies will increase the pressure on the environment in many regions by the increased transport network. In the pre-2004 EU members, the major problem in transport deals with congestion and pollution. After the recent enlargement, the new states that joined since 2004 added the problem of solving accessibility to the transport agenda.

Regional development
There are substantial economical disparities across the EU. On the high end Frankfurt has €71,476 PPP per capita, Paris €68,989, and Inner London €67,798, while Vaslui County with €3,690 PPP per capita, Botoşani County with €4,115, and Giurgiu County (all in Romania) with €4,277. Compared to the EU average, the United States GDP per capita is 35% higher and the Japanese GDP per capita is approximately 15% higher. There are a number of Structural Funds and Cohesion Funds to support development of underdeveloped regions of the EU.

Environment
The first environmental policy of the European Community was launched in 1972. Although the Commission's right to propose criminal law against “ecological crimes” was contested, it was confirmed by the Court of Justice. In 2007, member states agreed that the EU is to use 20% renewable energy in the future and that is has to reduce carbon dioxide emissions in 2020 by at least 20% compared to 1990 levels. This includes measures that in 2020, one-tenth of all cars and trucks in EU 27 should be running on biofuels.

Education and research
Education and science are areas where the EU's role is limited to supporting national governments. In education, the policy was to develop university exchange programmes which began in 1987. Scientific development is facilitated through the EU's Framework Programmes, the first of which started in 1984. The aims of EU policy in this area are to co-ordinate and stimulate research.