European Economic and Monetary Union Emu and Term Paper

  • Length: 7 pages
  • Subject: Economics
  • Type: Term Paper
  • Paper: #92320203

Excerpt from Term Paper :

European Economic and Monetary Union (EMU) and the euro. Included is a critical assessment of the sources used.

All of the sources used for this report were well written, concise, and understandable. The European Union and the Euro are difficult topics to understand on a first reading, but the authors had a real understanding of their topics, and explained the issues clearly.

For example, Taylor gives the background that makes the forming of the European Union more understandable. "This Summit produced a communique which supported the idea of European Union by 1980, and proposed a great push towards a European Great Society, illustrated by the efforts made to push the European social programme forward at that time, which no member government opposed" (Taylor 10).

The subject could be considered dry, but Taylor gives it life, making his book interesting to read, and right to the point. He writes with authority, and gives plenty of examples to make his point. His research included books, monographs and collections, journals, and included over 90 sources for his writings. His theories and conclusions are well thought out, and he backs them up with his extensive research.

It is clear he is a historian, as well as an economist. Taylor is a professor of International Relations for the University of London. He looks at both the economical and historic issues of the European Union, and uses his background as a historian to make the material more readable and interesting to the reader.

Feld also writes clearly and concisely, explaining the issues so the average reader can comprehend them. "Three institutions play important roles in the operation of EMS, now better known as the European Monetary Union (EMU): the Monetary Committee, the Committee of Central Bank Governors, and the Banking Advisory Committee"

Feld 44). He writes well, and although his book is not quite as interesting as Taylor's, the material is well researched and it is clear the author has a profound understanding of his subject, and its effect on the European Community.

Feld is a political scientist, so his work looks at the repercussions of the Union on Europe politically, and to a lesser degree at the financial impact of introducing the Euro. He uses over 40 sources as a background for his work, including many of his own other works on the subject.

This book might be used as a college textbook, or even as a reference book for members of the European Union or other nations looking for an in-depth review of the issues and history of the Union. Feld goes into more detail regarding the content of the actual treaties, and for that reason, this is a good manual for analytical reference and background. Feld does not reach any conclusion through his work; he simply states the facts, and the history behind them.

The Internet resources for this work were varied in their content and usefulness, but the did provide a good foundation to build on. They were very helpful for researching current reactions to the euro, and for news related items explaining the euro's introduction into the European economy. The resources included press releases, newspaper reports, official web sites, and journals. The most useful and accurate was the Euro official web site, which provided a brief history of the Euro, along with what the money looks like, and easy to understand explanations of the denominations, uses, and schedule for release.

On the other hand, the Internet resources tended to be much more biased and less reliable than the texts that were used. The Euro web site only presents the positive aspects of switching currencies, and the news reports tend to show the negatives of the switch. The texts were more balanced and uniform in their discussion, and in their handling of both positive and negative issues involved in the treaties, and with the Euro itself.

Often it was not clear what background the Internet authors had to write about their topics, and sources used were mostly interviews, not written or scholarly sources. The Internet sources serve a purpose, but basing a report on those sources alone could bias the report if the writer did not recognize and overcome the bias.

It is clear that most of the sources were not as concerned with historic records, or history in general, they were reporting what happened today. The only source with a historical background was the official Euro site, which did try to offer historical background that the lay reader could understand. They also even gave the history of the design of the notes and coins, and told how the designs were chosen, and who won the design contests for the best design. This gave depth to the site, and added a "human interest" side that the rest of the sources lacked.

In conclusion, it is clear that the Internet serves a vital purpose in preliminary research about historic topics, but for in-depth and detailed analysis, texts, journals, and collections are a much more valid and reliable source of information.

WHAT, WHY, AND HOW OF THE EMU AND EURO

The European Economic and Monetary Union is a single trade area made up of twelve countries within the European Union. It uses a single currency, the euro, among the member nations. Goods, services, people, and capital all move through the twelve member states without restriction, using this single currency at the same rate. The European Central Bank was created in 1998 to become the central bank for the financial handling of the euro throughout the area, and in fact is the official web site location for information on the EMU.

The original 11 member states participating in the EMU are Austria, Belgium, Finland, France, Germany, Holland, Ireland, Italy, Luxembourg, Portugal and Spain. Their currencies have been linked to each other and to the Euro since January 1, 1999, based on irrevocably fixed conversion rates. On January 1, 2001, Greece also became one of the participating member states. The only member states not participating are Great Britain, Sweden, and Denmark, who "opted-out" of participating in the single currency project. Great Britain has said it will participate sometime in the future.

The Euro has been circulating since January 1, 1999, which marked the launch of the single currency and start of transitional period. At this point, conversion rates were irrevocably locked, the European Central Bank took over control of monetary policy for the euro zone, and new issues of government debt began to be issued in the euro.

January 1, 2002, (known as "E-Day,") marked the end of the transition period. At that time, all obligations denominated in national currency units were redenominated into euros, and euro bank notes and coins were introduced. June 30, 2002 is the last date for national bank notes and coins to be legal tender in their respective currencies.

Proponents of the euro believe it will bring coherence to the marketplace and cut high costs of currency conversion, thereby encouraging investment and economic growth. They also contend it will help avoid the fluctuations of rapidly changing currency exchange rates, and that these rates have already stabilized since the introduction of the euro in 1999.

Opposition to the euro has been strong, especially throughout Great Britain. A survey done in September 2000 in Great Britain reported, "69 per cent of voters oppose the euro, a level unchanged since January. Only 23 per cent are in favour of joining, compared with 22 per cent in January" (Europe Yes! Euro No!). Other surveys indicate that it may be extremely difficult to change the British public's view of the euro in the next five years, regardless of the outcome of the transition. (Barclays Capital).

In other non-participating countries, opposition to the united currency is also high. "Denmark has drawn back, the Swedes remain outside in much the same position as Britain and Norway is not even an EU member. These economies are prospering outside the euro and recent forecasts suggest that Germany, the major euro-zone economy is teetering on the brink of recession while its monetary policy is now in the hands of independent bankers with ingrained deflationist instincts" (Hopkins).

BACKGROUND ON THE EURO AND THE EMU

European Heads of State or Government chose the name "euro" at the European Council meeting in Madrid in December 1995, but the concept of an EMU really reaches back to the 1950s, with the Treaty of Rome in 1957. That Treaty created the first European Union, and has since been amended by other treaties, including the Maastricht. It was originally signed by France, Germany, Italy, Belgium, the Netherlands and Luxembourg, and established what it called the "European Economic Community." This first Treaty began the journey that would turn into the EMU and create the euro.

In 1969, the European summit at The Hague made EMU an official objective. In 1970, the Werner report proposed a plan that would unite the economies and monies of Europe over a ten-year period. However, the plan was tabled because of…

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