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Wirtschaftliche Integration
Europas
Der Vertrag von Maastricht und die
Konvergenzkriterien
Wirtschaftliche Integration und
nationalstaatliche Interessen
Mc, June 2008
Lisbon Treaty
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A politician chosen to be president of the European Council for two-and-ahalf years, replacing the current system where countries take turns at being
president for six months
A new post combining the jobs of the existing foreign affairs supremo, Javier
Solana, and the external affairs commissioner, Benita Ferrero-Waldner, to
give the EU more clout on the world stage
A smaller European Commission, with fewer commissioners than there are
member states, from 2014
A redistribution of voting weights between the member states, phased in
between 2014 and 2017 - qualified majority voting based on a "double
majority" of 55% of member states, accounting for 65% of the EU's
population
New powers for the European Commission, European Parliament and
European Court of Justice, for example in the field of justice and home
affairs
Removal of national vetoes in a number of areas.
Questions
• Why did Germany and other
countries decide to give up
their national currency?
• What are the costs and
advantages of adopting a
common currency?
• Is it optimal for Europe to
have a single currency?
Göteburg 2003
The European Union
Fourth enlargement 2004
1995
Third enlargement 1995:
Austria, Finland, Norway and
Sweden admitted
(Norwegians again vote no).
1973
2004-2007
1958
Cyprus
1986
1981
Malta
Current State
The European Union (EU) and the Eurozone: 27 members
in EU and 15 members in the Eurozone excluding U.K.,
Sweden and Denmark. 27 members are Germany,
France, Italy, Belgium, Netherlands, Luxembourg,
Ireland, UK, Denmark, Greece, Portugal, Spain, Austria,
Finland, Sweden, Czech Rep., Estonia, Hungary, Poland,
Slovenia, Latvia, Lithuania, Slovak Rep., Cyprus, Malta,
Bulgaria (2007), Romania (2007).
• Hence, there are currently 15 European Monetary Union
(EMU) members, Denmark and the UK negotiated opt-out
clauses while Sweden postponed entry into the Euroland.
Slovenia adopted the Euro on January 1st, 2007 and Malta
and Cyprus on 2008.
• 3 countries in the pre-accession state: These are Croatia,
Turkey and Macedonia.
European Economic and Monetary Union
(EMU, informal: “Eurozone”)
Belgien
Deutschland
Irland
Griechenland
Spanien
Frankreich
Italien
Zypern
Luxemburg
Malta
Niederlande
Österreich
Portugal
Slowenien
Finnland
The Euro: A Short Story
• The EMU was established under the Maastricht
Treaty (signed 1992).
• In January 1999, parities between the currencies of
11 countries and the Euro were “irrevocably” fixed.
Notes and coins were introduced on 1 January 2002.
• The new European Central Bank (ECB), based in
Frankfurt, became responsible for monetary policy
for the Euro area.
The Treaty of Maastricht
The Treaty of Maastricht
• The main economic element of the
Treaty of Maastricht was a firm
commitment to launch a single currency
by January 1999.
• Its key provisions regarding EMU were
– A list of five criteria for admission to
the monetary union (the ‘convergence
criteria’)
– A precise specification of central
banking institutions
– Additional conditions mentioned (e.g.
the excessive deficit procedure)
The Convergence Criteria
• Inflation: not to exceed by more than 1.5
per cent the average of the three lowest
rates among EU countries
• Long-term interest rate: not to exceed
by more than 2 per cent the average
interest rate in the three lowest inflation
countries
• Budget deficit: deficit less than 3 per
cent of GDP
• Public debt: debt less than 60 per cent
of GDP
• These criteria had to be fulfilled in 1998
(the last year before admission)
The Convergence Criteria
• The overarching aim of the convergence
criteria was to ensure long-run price stability,
i.e. low inflation
– Partly due to insight that inflation is bad for
economic welfare
– Partly due to German pressure to emulate
the Bundesbank
• Inflation: the most straightforward criterion but
…
– Countries could artificially lower their rate
of inflation for just one year (1998)
– So how to guarantee a permanently low
rate of inflation?
– This is were the other criteria come in.
Economic Policy in the Euro Zone
Based on articles of the Maastricht Treaty the
Stability and Growth Pact (SGP) in 1997
aims at fiscal discipline:
Member states adopting the euro have to meet
the Maastricht convergence criteria, and the
SGP ensures that they continue to observe
them:
• The medium-term budgetary objective of positions
close to balance or in surplus
• A timetable for the imposition of financial penalties
on counties that fail to correct situations of
“excessive” deficits and debt promptly enough
Benefits and Costs of a Common
Currency
Benefits
• Elimination of Transaction Costs
• Reduction in Price Discrimination
• Reduction in Foreign Exchange Rate
Variability
Costs
A nation gives up its freedom to set its own
monetary policy:
interest rates,
external value of its currency
(exchange rate)