THE EUROPEAN INTEGRATION

IVASHEV AKHMED

PLAN

• Progress of European integration• Enlargement of the European union• Preparation of economic and monetary union (EMU)• Three stages of economic and monetary union (EMU)• Convergence criterion• Economic and monetary union • Benefits of the EURO• Key characteristic

of the euro area• Financial integration

of the euro area

PROGRESS OF EUROPEAN INTEGRATION

1952

ECSC European coal and Steel Community

1958

EEC and EURATOMEuropean economic communityEuropean Atomic Energy Community

1967

ECEuropean Communities

1993

EUEuropean UnionMaastricht treaty 2009 EU

Treaty of Lisbon

ENLARGEMENT OF THE EUROPEAN UNION

1953• Belgium• Netherlands• Luxembourg• France• Saarland• Italy• West Germany

1973• United Kingdom• Gibraltar• Denmark• Greenland

1981 • Greece

1986 • Spain• Portugal

1995• Austria• Sweden• Finland

2004 • Malta, Cyprus, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Slovenia, Hungary, Akrotiri and Dhekelia

2007 • Bulgaria• Romania

20013 • Croatia

PREPARATION OF ECONOMIC AND MONETARY UNION (EMU)

•BARRE PLAN

1969

•WERNER REPORT

1970

• DELORS REPORT

1988

THREE STAGES OF ECONOMIC AND MONETARY UNION (EMU)

• 1 July 1990 - Abolition of all restrictions

• on the movement of capital

1• 1 January 1994

– Establishment of the European Monetary Institute , the ECB ‘s predecessor

2• 1 January 1999

– fixing of conversion rates, ECB responsible for monetary policy

31 January 2002 – Introduction of EURO banknotes and coins

CONVERGENCE CRITERION

Economic and Monetary Union

Interest rate convergence

Exchange rate stability

Price stability

Pubic Finance discipline

ECONOMIC AND MONETARY UNION

The Economic and Monetary Union (EMU) in the year 2014. 

•  Members of the Eurozone•   ERM-II-member (Lithuania)•   ERM-II-member with opt-

out (Denmark)•   EU-member with opt-out

(United Kingdom)•   The rest of the EU-

members

BENEFITS OF THE EURO

Security of purchasing power

PRICE TRANCPARENCY

REMOVAL OF TRANSACTION COSTS

Elimination OF EXCHANGE RATE RISK

Country b€ 10,738

Country a € 13,247

KEY CHARACTERISTIC OF THE EURO AREA

Overall inflation rate in 2002:

2.3%Inflation directly linked to the introduction of euro

banknotes and coins

Inflation not linked to the introduction of

euro banknotes and coins, i.e.:

o Normal price increases

o High increases in oil and petrol prices

o High increases in fruit and vegetable

prices

Overall inflation rate in

2002

But:• Negative expectation• Some retails taking

advantage• Price level in national

currency “frozen in time”

High perceived inflation

FINANCIAL INTEGRATION OF THE EURO AREA

Integration of financial markets, financial

infrastructures and financial institutions

o results in economies of scale, larger

variety of financial products at lower

cost

o enhances transmission of monetary

policy impulses

o contributes to safeguarding of financial

stability and smooth operation of

payment systems

EU todayEuro area

THANK YOU FOR YOUR ATTANTION