THE EURO, JUST ARRIVED
The risk of the European
common currency
Readings specially prepared for the INSTITUTO DE
ESTUDOS EUROPEUS,
Macao by Ramón
Tamames and edited by Mónica Lopez
INDEX
PART I
FACING THE FUTURE: THE CONSEQUENCES OF MONETARY UNION
A Summing Up, by Ramón Tamames
1. On founding fathers
2. A culture of stability and growth
3. Flexibility, adjustments and reforms
4. Tax harmonization
5. Euro as a reserve and shelter currency
6. Integration process and enlargement of the Euro Zone
7. On sovereignty of foreign exchange and budgetary autonomy
8. EMU and the future: a mental, political and economic revolution
PART II
EUROPEAN MONETARY UNION AND EURO:
ORIGINS, IMPLEMENTATION AND PERFORMANCE
A brief handbook on Euro by Ramón Tamames
Chapter 1: The long march towards monetary Union
1. The beginning: the Single European Act
2. The Delors Repor and Maastricht
3. Convergence policy and the Europe an Monetary Institute
3.1. Public deficit
3.2. Inflation
3.3. Long-term interest rates
3.4. Public debt
3.5. Currency stability
Chapter 2: Four days in May: the launching of the Euro
1. The final stretch to the single currency. Three stages
1.1. Stage A. The list of founding members
1.2. Stage B. Irrevocable conversion
1.3. Stage C. Changeover to the Euro
2. Four days in May
2.1. Friday the 1st: the members list
2.2. Saturday the 2nd: institutions
2.3. Sunday the 3th: interim period
C.1. Bilateral exchanges rates for the interim period
C.2. Irrevocable conversion for 1 January 1999
2.4. Monday the 4th : performing Monetary Union
Chapter 3: The Euro in action: coexistence of currencies,
operations, contracts.
1. Basic effects of Euro
2. Coexistence of national currencies and Euro
2.1. Gradual transition
2.2. Peaceful coexistence
2.3. Currency exchange
3. Euro bank notes and coins
3.1. What will the Euro notes and coins look like?
3.2. The Physical conversion to Euro
4. Operations of the ECH and the National Central Banks (NCBs)
5. Payments system
5.1. TARGET
5.2. Computer system and electronic cash disbursement
A. Automatic tellers and vending machines
B. Credit cards
6. Continuity of contracts
6.1. Legal equivalence principle between the Euro and national monetary
currencies
6.2. No obligation no prohibition principle
6.3. Contracts outside EU
Chapter 4: Euro, markets and companies: from theory to practice
1. Financial operations
1.1. Credit
1.2. Interbank market: Euroibor
1.3. Currency exchange
1.4. Public debt
1.5. Black market money
1.6. Stock exchanges
1.7. Derivatives (options and futures)
1.8. Investment funds
2. Impact of Euro on businesses and consumer spending
2.1. The rounding off effect
2.2 Deciding when to switch to Euro
2.3. Transpaerncy and Transaction costs
2.4. Europrices
2.5. Shopping season and consumer protection
2.6. Transition plan arid Euro committees
3. Accounting, taxation and human resources
3.1. Accounting entries and computing
3.2. Taxation
3.3. Payroll
Chapter 5: The Euro and the international scene:
Revolution and declaration of independence
1. Facing a new world
2. Advantages of the Monetary Union
2.1. Culture of stability
2.2. Low interest rates, investment and employment
2.3. Disappearance of the exehage risk
2.4. Lower transaction costs, grnater competition and
bigger business
2.5. Cash reserves
2.6. Needed reforms
2.7. International prosperity and solidarity
2.8. Will there be fiscal harmonization?
3. The possible drawbacks of Monetary Union
4. A favorable final balance
5. The EU's Political and economic future
6. The Monetary Union revolution: a premonition
7. Declaration of independence
PART IlI
THE MAIN EURO~SUMMIT DOCUMENTS
A. The single currency background brief
Hen Patterson for the European Parliament, Luxembotag, 3 April 1998
1. The Basic Facts
2. The Timetable
3. Some Issues
4. The position of the European Parliament
5. The case for a Single Currency
5.1. The Single Market
5.2. The international diniension
5.3. The political dirneusion
6. The opposition to a Single Currency
6.1. The economic objetions
6.2. The political objetions
B. Decision on the participating countries in the single
currency
Presentation of the European Padiament opinion by
the president of the European Parliament, Mr Gil Robles, 2nd May 1998
1.Belgium
2. Germany
3. Greece
4. Spain
5. France
6. Ireland
7 Italy
8. Luxembourg
9. The Netherlands
10. Austria
11. Portugal
12. Finland
13. Sweden
14. Last decision. Appointment of the members of the executive board
of the European Central Bank
15. Statement of the Heads of State or Government on appointments to
the Executive Hoard of the European Central Bank
C. Recommendation on the appointment of the members of the executive
hoard or the European Central Bank (Council Ecofin),
Brussels, 2 May 1998
1. Appointment of three members of the committee on terms and conditions
of employment of the ECH executive board
2. Conclusions on the conunission recommendations on the practical
aspects of the introduction of the euro
3. Regulation on technical harmonisation of euro corns
4. Regulation on the introduction of the Euro
5. Council statement on Greek convergence
D. Joint communique on the determinadon of the irrevocable conversionrates
for the euro.
Meeting of the Ministers for Econoinic Affalrs and Finance, Governors
of Central Banks, European Commission and European Monetary Institute,
Brussels, 3 May 1998
1. Determination of the irrevocable conversion rates for the Euro
1.1. Why can only bilateral rates be announced?
1.2. Bilateral rates which will be used in deternifflig the irrevocable
conversion rates for the Euro
1.3. Calculation of the exchange rates of the official ECU on 31 December
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