On the 1st of January 1999, 11 countries sat down and worked out the final details with regard to implementing 'Stage 3' of the Euro-Rollout. They also agreed that by 2002, Europe would have a single currency. With the changeover to Euro notes and coins now complete, over 300 million people in the 'Eurozone' are beginning to experience some of the pros, and the cons of EMU.
Theoretically, the concept of EMU can be traced back as far as the Treaty of Rome in 1957. Although the treaty was very vague on issues of monetary policy, it does make reference (in articles 104-109, now 102 to 130) to the establishment of a Monetary Committee, whose task was to "Keep under review the monetary and financial situation." The overall feeling of the committee was at the time however that monetary union was still a relatively undesirable option. Over the years however, this began to change. The advent of the Breton Woods system in the USA promised increased stability through the use of a controlled mechanism of exchange rates. And, by 1969, the EU was beginning to target full monetary union, and this was the centre of debate at the Hague Summit. Progress was very slow however, and it wasn't until 1979 that Chancellor Schmidt of Germany, despite the advice of his own central bank, decided to implement the European Monetary System (EMS) (Gedmin, 1997). The idea behind EMS was to have fixed, but periodically adjustable exchange rates among EU countries, with narrow margins of adjustment.
Since its inauguration in 1979, the EMS can be considered to have been relatively successful in achieving its objectives. Exchange rates were reasonably well stabilised, and EMS was hailed by many as a successful precursor to full European Monetary Union (de Grauwe, 2000). Proponents of monetary union say that the success of EMS is a very important factor when looking at the pros of the euro. However to assume that simply because the EMS was a success that this also means that the Euro will be a success would be rather naïve as the two concepts are still worlds apart.
The final 'big push' towards EMU came in the form of the Maastricht Treaty Summit in December of 1991. The treaty laid down the foundations for monetary union based on the recommendations in the Delors Report (Delors, 1989), and for the first time, EMU seemed like an imminent reality.
EMU has been called "the single most important development on the global monetary scene" (Owen & Cole, 2000). Debate surrounding its likely success tends to be polarized to one extreme view or the other, with some people adamantly 'pro-euro' and other people vehemently 'euro-sceptic'. Those who oppose the euro say that it would be "not merely an ill-advised undertaking, but a disastrous one; a stride further along the road to a European super-state that will submerge individuality of the European nations in an unwieldy federation, hobbled by bureaucracy, commanding little popular support and imposing a crippling burden of...