GP360 European Union Project

Introduction: EU for Americans

The Euro

Twelve of the EU countries are in what is referred
to as the Eurozone, countries that have given up their domestic
currency for the Euro. The other three EU countries have chosen not to
join, and the ten new countries do not yet qualify. There is a set of
rules for what a country must achieve to join the Eurozone. These
involve issues like having a small national deficit, low inflation, etc.

The creation of the Euro was called for in a treaty
negotiated in the early 90's and came into virtual existence in 1998
(?), but only in computers and bank accounts. You couldn't physically
hold a Euro in your hand until 2002.

Monetary policy for the Euro is controlled by the
European Central Bank, which is even more independent of national
governments than our own Federal Reserve. It relies on the Stability
and Growth Pact which defines monetary policy. The SGP is quite
draconian and is controversial. Germany and France famously violate its
terms, and have avoided penalties - so far. Most agree that the SGP
needs reform, but how and when is a big controversy.

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