The implications of currency union

Article Abstract:

The success of the proposed single currency in Europe's integration into a single market rests on several factors, among which is the UK's refusal to participate in the proposed scheme. The Maastricht summit of the European Community (EC) finalized treaties for European political union and economic and monetary union (EMU). Implementation of the EMU treaty is set to occur in three stages involving the finalization of the European internal market program, the establishment of the European Monetary Institute, the setting of fixed rates of currency, and the adoption of a single currency. Critical to the convergence of European currencies are price stability, sustainability of government finances, steadiness of the exchange rate mechanism, and the maintenance of long-term government bonds based on the rate limits of low-inflation member countries. These factors make up a criteria test for convergence for 1994-1995.

Planning, Euro (Currency), European Monetary System, Single European market

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European growth prospects brighten

Article Abstract:

European Union member countries appears to be on the brink of economy recovery. The region suffered an economic slowdown in the 1996, with annual growth rate dropping to 1.6% from 2.5% in 1995. It was attributed to currency appreciation in the previous year, which led to slower export growth, lower industrial production and reduced investment spending. Many EU governments responded by cutting interest rates and relaxing monetary policy. These measures, together with currency depreciation, have helped revitalize the European economy. EU countries post growth of more than 2%. Denmark, Ireland, Spain, Portugal, the UK and the Netherlands all reported above-average growth, although Germany, France, Italy, Sweden and Austria experienced weaker growth. The outlook for the EU in 1998 is promising in view of the low inflation and interest rates.

Economic development, Western Europe

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