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The Euro & Whether Britain Should Join The Euro ?

4571 words - 18 pages

The Euro originated from different treaties and several changes in the governing of Europe's economy. All the treaties were prepared and signed by the members of the European council. The European council consisted of the Heads of State or Government of each member states of the European union. The European Economic Council {ECC} was created by 1957 through the Treaty of Rome. The treaty was signed by Belgium, France, West Germany, Italy, Luxembourg and the Netherlands. The aim of this union was that if countries were dependant on each other financially, they would be least likely to go to war. Eventually the EU was formed. It was set up in order for prime ministers of different countries to meet up and decide on policies that would be enforced by commissioners. A European government was created in order to govern the union. It had the power to throw out all of the commissioners or refuse to accept the EU budget. However it could only veto the whole budget and not parts of the budget. This hence limited its power over the European union. The EU has now become the second largest import and export market in the world. However many people amongst the EU felt that in order for the union to become truly strong, a monetary union was needed. The American strength and environment was envied by many Europeans that wished Europe to be similar to the USA. Europe begun monetary unification in 1950, when the European Payment was established. It was created in order to provide a framework for achieving currency convertibility. The finance minister of Luxembourg was appointed to in 1969 to create plan for the monetary union to be completed by 1980. However economical difficulties such as high inflation meant that the plan was not carried out. In 1970, the publication of the Werner Report showed that the report was not in favour of a single European currency of a European Central bank. However it was in favour of the centralisation if member states macroeconomic policies and complete free movement of capital.In 1979, the European Monetary System {EMS} was created. The aim of the system was to stabilise the exchange rates of the national currencies and control inflation. It was the component of the Exchange rate mechanism {ERM}. Member countries agreed to peg their currencies within 2.25 % band of a weighted average of European currencies. During one period the currencies were pegged against the deustchemark. In 1986, the Single European Act modified the treaty of Rome. This formalising political co operation between the member states and including monetary cooperation. In June 1988, the EC leaders begun to question with more interest the idea of a closer monetary co operation as several summits were held. In February 1992, The treaty of Maastricht was signed. The treaty resulted in fast advancements in European monetary unification. A date was set for the replacement of national currencies by a single shared currency. In 1992, the UK withdrew from the ERM after...

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