EMU & EURO

"Why was a single currency needed?"

Prevent devaluations, remove exchange fluctuations, reduce costs, increase transparency

"Main cost of EMU"

"Loss of national monetary autonomy."

"Political reasons for EMU"

"Global power and political integration."

"Was EMU in original treaties?"

"No."

"When was euro planned?"

"Maastricht Treaty 1992."

"When was euro adopted?"

"1999; cash entered circulation in 2002."

"Permanent euro opt-out"

"Denmark."

"Current non-euro members"

Czech Republic, Hungary, Poland, Romania, and Sweden

"Convergence criteria"

price stability, sound public finances, exchange rate stability, and long-term interest rate convergence

"Price stability criterion"

"No more than 1.5% above best 3 states."

"Deficit criterion"

"No more than 3% of GDP."

"Debt criterion"

"No more than 60% of GDP."

"Interest rate criterion"

"No more than 2% above best 3 states."

"Exchange stability criterion"

"ERM II participation for 2 years."

"Who checks convergence criteria?"

"Commission and ECB."

"Who ratifies euro adoption?"

"EcoFin and EP."

"Main objective of ECB monetary policy"

"Price stability."

"Stability and Growth Pact"

"Fiscal discipline rules for EU states."

"European Stability Mechanism"

"Financial assistance for eurozone members."

"European Semester"

"Annual EU economic governance cycle."

"Main EMU problems"

Economic differences, weak economic integration, lack of political integration

"How is price stability measured?"

"Consumer price inflation."

"How is sound public finance measured?"

"Government deficit as percentage of GDP."

"How is sustainable public finance measured?"

"Government debt as percentage of GDP."

"How is durability of convergence measured?"

"Long-term interest rates."

"How is exchange-rate stability measured?"

"Deviation from a central exchange rate."

"Who ratifies euro adoption?"

"EcoFin and the European Parliament."

"What is the Eurosystem?"

"ECB plus national central banks of eurozone states."

"What type of institution is the ECB?"

"Independent central bank."

"What is the Euro Summit?"

"Meeting of euro-area leaders."

"What is the Fiscal Compact linked to?"

"European Stability Mechanism assistance."

"What broader project did the ESM support?"

"European Banking Union."

"What is the Economic Dialogue?"

"EP scrutiny mechanism over economic governance."