Economic and Monetary Union (EMU)
Economic and Monetary Union (EMU) : This is the name given to the process of harmonizing the economic and monetary policies of the Member States of the European Union with a view to the introduction of a single currency, the euro. It was the subject of one of the two Intergovernmental Conferences (IGCs) which concluded their deliberations in Maastricht in December 1991. The Treaty provides that EMU is to be achieved in three stages: first stage (1 July 1990 to 31 December 1993): free movement of capital between Member States, closer coordination of economic policies and closer cooperation between central banks; second stage (1 January 1994 to 31 December 1998): convergence of the economic and monetary policies of Member States (to ensure stability of prices and sound public finances) and the creation of the European Monetary Institute (EMI) and, in 1998, of the European Central Bank (ECB); third stage (from 1 January 1999): irrevocable fixing of exchange rates and introduction of the single currency on the foreign-exchange markets and for electronic payments, followed by the introduction of euro notes and coins from 1 January 2002. The third stage of EMU was launched in 11 Member States, which were joined two years later by Greece. Three Member States have not adopted the single currency: the United Kingdom and Denmark, both of which benefit from an opt-out clause, and Sweden, which does not at present meet all of the criteria regarding the independence of its central bank. On 1 January 2002 euro notes and coins were introduced in the Member States, gradually replacing the national currencies ("legacy" currencies). On 28 February 2002 the transitional stage of dual circulation of the legacy currencies and the euro came to an end. The euro is de facto the sole currency for more than 476 million Europeans. The challenges facing the long-term success of EMU are continued budgetary consolidation and closer coordination of Member States' economic policies. See: European Central Bank
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