About the Euro Adoption in Lithuania
The Euro and the Euro Area
History of the Euro
Economic and Monetary Union
Economic and Monetary Union
Economic and Monetary Union (EMU)
In June 1988 the European Council confirmed the objective of the progressive realisation of Economic and Monetary Union (EMU). A committee chaired by Jacques Delors proposed that EMU should be achieved in three discrete but evolutionary steps.
Stage One of EMU
On the basis of the Delors Report, the European Council decided in June 1989 that the first stage of the realisation of EMU should begin on 1 July 1990. On this date, in principle, all restrictions on the movement of capital between Member States were abolished.
12 March 1990 additional responsibilities, which were given to the Committee of Governors of the central banks of the Member States of the European Economic Community (EEC), were laid down in a European Council decision. New tasks of the Committee of Governors included holding consultations on, and promoting the coordination of, the monetary policies of the Member States, with the aim of achieving price stability. The Committee of Governors started the preparatory work for Stage Three of EMU.
For the realisation of Stages Two and Three, it was necessary to revise the Treaty establishing the EEC (the Treaty of Rome) in order to establish the required institutional structure. To this end, an Intergovernmental Conference on EMU was convened, which was held in 1991 in parallel with the Intergovernmental Conference on political union.
The negotiations resulted in the Treaty on European Union which was agreed in December 1991 and signed in Maastricht on 7 February 1992.
Stage Two of EMU
The two main tasks of the EMI:
• to strengthen central bank cooperation and monetary policy co-ordination, and
• to make the preparations required for the establishment of the European System of Central Banks (ESCB), for the conduct of the single monetary policy and for the creation of a single currency in the third stage.
In December 1995 the European Council agreed to name the European currency unit to be introduced at the start of Stage Three, the “euro”, and confirmed that Stage Three of EMU would start on 1 January 1999. A chronological sequence of events was pre-announced for the changeover to the euro. This scenario was mainly based on detailed proposals elaborated by the EMI.
At the same time, the EMI was given the task of carrying out preparatory work on the future monetary and exchange rate relationships between the euro area and other EU countries.
In December 1996 the EMI presented its report to the European Council, which formed the basis of a Resolution of the European Council on the principles and fundamental elements of the new exchange rate mechanism (ERM II), which was adopted in June 1997.
In December 1996 the EMI also presented to the European Council, and subsequently to the public, the selected design series for the euro banknotes which was put into circulation on 1 January 2002.
in June 1997 the European Council adopted the Stability and Growth Pact – two Regulations form part of the Stability and Growth Pact, which aims to ensure budgetary discipline in respect of EMU. The Pact was supplemented and the respective commitments enhanced by a Declaration of the Council in May 1998.
On 2 May 1998 the Council of the European Union – in the composition of Heads of State or Government – unanimously decided that 11 Member States (Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland) had fulfilled the conditions necessary for the participation in the third stage of EMU and the adoption of the single currency. The Heads of State or Government also reached a political understanding on the persons to be recommended for appointment as members of the Executive Board of the European Central Bank (ECB).
Also in May 1998, the ministers of finance of the Member States adopting the single currency agreed together with the governors of the national central banks of these Member States, the European Commission and the EMI that the current ERM bilateral central rates of the currencies of the participating Member States would be used in determining the irrevocable conversion rates for the euro.
On 25 May 1998 the governments of the 11 participating Member States appointed the President, the Vice-President and the four other members of the Executive Board of the ECB. Their appointment took effect from 1 June 1998 and marked the establishment of the ECB. The ECB and the national central banks of the participating Member States constitute the Eurosystem, which formulated and defined the single monetary policy in Stage Three of EMU.
On 1 June 1998 with the establishment of the ECB, the EMI had completed its tasks and went into liquidation.
Stage Three of EMU
On 1 January 2001 the number of participating Member States in EMU increased to 12, when Greece entered the third stage of EMU. Slovenia joined as the 13th member on 1 January 2007. Since those dates the central banks of the two countries have been part of the Eurosystem.
On 1 January 2008 Cyprus and Malta joined EMU.
