The Treaty Of Rome Established The European Economic Community ( Eec )

As of 2012, only seventeen of members of the European Union have decided to use Euros as their currency. In order for the members that adopted the Euro as their currency to successfully help their economic problems, the Eurozone members had to follow strict instructions put into place the European Union. The strict policies included strict control over inflation, government debt, and long-term interest rates (Mckee 525). The union put these strict policies into place to give the union the tools that it needed to take in order to help fix the economic crisis in each country participating in the Eurozone. Without the full cooperation of each country, it could cause the plans to fix the economic crisis within each country to fail because of the different interests by each individual country.

The European Economic Community was an organization started in 1957 by France, West Germany, the Netherlands, Belgium, Italy, and Luxembourg, in post War World II torn European. This organization was a union between the Steal and Coal Community and The European Atomic Energy Community. The goal of the organization, heavily influenced by John Monnet one of its founders and National Liberation Committee member at the time, was to build a stronger cohesive Europe through collaboration and economic ties to bring mutual prosperity. This organization and its ideals developed into the well know European Union of today, that currently sits with 28 members. However, one controversial possible membership has increased in importance over the years.

After the long awaited single currency implementation known as the euro, there have been many ups and downs to this monetary system. Many have been quick to criticize while others still praise its value claiming it will soon be valued strongly against the dollar. Our paper looks into the various aspects of the euro and the progress it has made since its initiation. We begin with a brief history of the euro then move on by raising some questions concerning the effects of the euro on various economic aspects such as competition and global financial institutions. We then provide insight to the various strengths and weaknesses of the euro and the implications this currency has on various institutions such as banks.

The euro was introduced on the 1st of January, 1999 to foster economic integration and growth. The current member countries of the Euro are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The Euro involves a single, fixed currency within the Eurozone area. The member states are required to adopt a common monetary policy set by the European Central Bank (the same interest rate and policy on quantitative easing). The Growth and Stability Pact was incorporated to set strict limits on government’s budget deficit, gross debt and price stability.

The euro zone which is officially called the "euro area" consists of 17 countries. In other words, it consists of countries which are also part of the European Union. The European Union consists of approximately 27 member states. For a country to be a member of the euro zone it is necessary for it to be a member of the European Union. A single currency was introduced as a result of European union reforms and the currency was named as the "Euro". Those countries which adopted the Euro as their currency by giving up their local currencies became the member states of the Euro Zones. These countries include: Austria, Belgium, Estonia, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The introduction of a social and economic grouping is often to create a single market, such as was the case with the EU and NAFTA. The European Union is an economic and political union of 27 member states which are located in Europe – its roots are with the EEC which was formed in 1957. The European Union was fully established when the Maastricht Treaty came into force on 1st November 1993. The original objective of the EU was to create such single market, so that there was the free circulation of goods,

The euro was introduced as a single currency as it offered many advantages over the previous situation where each European country had its own currency. One of the main objectives of introducing the euro was to strengthen relations between member states. The idea, rather a simple one, if you get countries to trade with each other then they are a lot less likely to go to war. It seems a legitimate reason, as Western Europe has been at peace now for nearly seventy years and counting.

An economic downturn followed in the 1990s, and the Maastricht Treaty was seen as the response, to create a single market, monetary union and a common foreign and security policy . This was meant to create a ‘spill-over’ into other, weaker areas of the economy, helping all who were a part of it . The European Monetary Union (EMU) (1999) was a direct result of the Maastricht Treaty, leading the way for the Euro in 1999 . It was widely believed a common currency and shared markets would create a stronger place in the global economy, one that could potentially rival that of the United States . The proposed Eurozone demanded several criteria to be fulfilled by its potential member states before it could be created in 1998. This included: annual fiscal deficits no greater than 3% of GDP, accumulated government debt no greater than 60% of GDP, inflation no more than 1.5% higher than the average rate of the three least inflationary European members, and long-term interest rates no more than 2% higher than these same three . However, by 1997, only Luxembourg and Finland met the criteria . By May 1998, 11 countries joined, three met the criteria but declined to join, and only Greece was ineligible . The EMU was organized to accommodate diversity in financial and economic policy-making, however merging both financial and economic policies was

When the European Union was “founded with the signing of the Maastricht Treaty in 1992,” it included many of the countries that were a part of the previous European Community, including Greece (Prono). The European Union was formed to create “economic and political integration between an ever-growing group of European countries” (Prono). When the euro was introduced in 2002, Greece adopted it, and “was one of the poorer European countries to do so” (“European”). This led to bond traders by buying Greece’s debt, “believing that the Greek economy had been bolstered by Greece’s adoption” of the Euro (“European”). After “the U.S. investment bank Lehman Brothers went bankrupt” in 2008, a financial crisis began that eventually spread to Europe (“European”). After the financial crisis spread to Europe, the Prime Minister of Greece, George Papandreou “announced that the nation’s budget deficit was actually twice what had previously been reported” (“European”). This led to many banks and and other financial entities not allowing

The European Union launched the economic and monetary union (EMU) of Europe on January 1st, 1999. January 1st of 2002 marked the establishment of a single currency through the introduction of euro bills and coins to 12 EU states. Formally called the “eurozone”, the movement to a single currency has developed as 18 EU member states currently use the euro. Desiring further political integration, the EMU was designed to maintain price stability through a central bank known as the European Central Bank (ECB). Although economic certainty was the goal, a financial crisis that erupted within the eurozone lead to questions about the credibility of the EMU. The debate over political integration was furthered by the introduction of ideas for increased fiscal federalism, similar to the current policies within the United States currency union. For a monetary union to succeed, a fiscal union is necessary to solve the vulnerabilities of the EMU and supervise national policy to prevent macroeconomic imbalances throughout Europe. However, the dispute over political centralization impedes the establishment of such a fiscal system within the upcoming decade.

Europa (n.d. d) describing the single market and related policies stated that all borders between Member countries disappeared allowing the freely movement for goods, people and capital in order to stimulate industrial and economical extending within a large area. Grabtree (2007) researching the EU operation has found that the introduced unique currency called Euro has an advantageous impact on companies function and on economy in general. He stated that transfers became easier, costs more transparent and prices on goods became averaged in the whole union. Such strengthening of the economy brought stability and bright future. Moreover, because all economies became unified, countries gained the ability as a common body to overcome financial crises and agree on issues that mainly affect the economy. The Europa (n.d. e) also made a suggestion that such strengthening of economy made possible the financial help for poor regions that require the raising of life standard. Because of this reasons it is beneficial to a country to join the union.

In 1992 the Maastricht Treaty was developed by the European Union and signed by 12 member nations to create a common Euro Zone. This Euro zone uses a single currency called the Euro, in hopes that this currency will make transactions across all member nations’ trade and exchange easier. However, no one could have imagined how big of an impact the down fall of a nation’s deficit could have on the Euro Zone, until Greece signed the Maastricht treaty in 2002. When the Greek government came on to the Euro Zone, Greece’s budget deficit and spending habits came along with it too. In order to join the Euro zone, Greece prevented the Euro zone countries from knowing its true budget deficit, inflation, interest rates, and other monetary

The intricacy of European sovereign debt crisis is about the euro system. In 1991, there was a proposal among European countries (ECM) for common currency in order to benefit the entire development of these countries and even compete with the increasingly powerful America. Finally in 1999, 11 euro area countries adopted a single currency—the Euro, which means the birth of Euro system.

Long before the European Central Bank was involved with the monetary policies of Europe, visionaries saw the need for a common marketplace to bring the people of Europe closer together. This began with the Treaty of Rome in March of 1957. The aim of the treaty was to create a zoned marketplace, free of tariffs that would unite to the people of Belgium, Netherlands, Luxembourg, Germany, France, and Italy. The idea behind the treaty was that those living within the common marketplace zone would achieve a higher standard of living by combining their strengths and resources, having the same trading policies, and be able to challenge the economic muscle of the United States.

The EU previously known as the European Community can be defined as a unique partnership between 28 European member-states operating as the world’s largest single market. The union originated in 1957 through its successor – the European Economic Community (EEC) which at the time had six members. In 2013, the market had a population of around 505 million people and accounted for 23% of global Gross Domestic Product (GDP), amounting to €13.08 trillion (European Immigration Service, 2014).