EURO - THE EUROPEAN UNION’S SINGLE CURRENCY - A CHALLENGE AND / OR A GOOD SOLUTION FOR CROATIA

The first attempt to outline a path of economic and monetary union in three stages over a period of ten years, begins in 1970 with the report WERNER 1. However, this initial project did not come to fruition as a result of strong tensions that describes exchange currencies in international markets after the collapse of the Bretton Woods system in the early 70s, as well as the economic recession caused by the oil crisis in 1973. To cope with this situation fragile and unstable, nine member states of the EEC in 1979 created the European Monetary System (EMS), which basically was the mechanism of the exchange rate (MCR). This mechanism is provided for these 9 countries currencies, the determination of an exchange rate regime fixed, but adjustable. The idea of EMU will rejuvenate the Single European Act in 1986, which created a common market. This milestone also brought the conviction that the full benefits of the common market only if it can yield the participating countries will st use a single currency. In 1988, the European Council Delors Committee appointed to examine the possibilities and avenues for the creation of Economic and Monetary Union (EMU). A year later, the Delors Report will open the way to negotiations on the European Union Treaty, which created the European Union (EU) and thought the Treaty establishing the European Community. Otherwise known as the Maastricht Treaty, because the town where it was signed in February 1992, the Treaty of the European Union came into force on 1 November 1993. Road to EMU in Europe passed through three stages: The first phase (1990-1993) was characterized by the establishment of a common European market through the removal of all internal barriers to the free movement of persons, goods, capital and services within Europe. The second phase (1994-1998) began with the creation of the European Monetary Institute and focused mostly on the technical preparations for the European common currency, to avoid higher deficits and convergence of economic and monetary policies of the Member States (for sigruar price stability and sound public finances). The third phase began on January 1, 1999, with the irrevocable fixing of exchange rates, the transfer of powers of monetary policy to the European Central Bank (ECB) and the use of the euro as a single currency. On 1 January 2002, euro banknotes and coins were put into circulation in the participating countries and the end of February 2002 national banknotes and coins are no longer legal tender rejoiced. Today, after almost 12 years in circulation casting the single European currency and after the economic crisis of the euro area, which appeared in all its forms naturally arises: Euro has brought more costs or benefits? So, this paper aims to bring an analysis of the costs and benefits of the common currency Euro. DOI: 10.5901/ajis.2014.v3n6p67

Economists, politicians and the public largely agree that political factors are involved both in the decision to move towards economic integration and in the more detailed formulation of that decision. The integration process within the framework of the European Union is a classic example of the political dimensions of economic integration, which are particularly pronounced whenever monetary integration is involved (Theurl 1991; Reeh 1993). European monetary unification is not only the technical process of an irreversible merging of national currencies into a single European currency. It is a step which reflects profound political aims and which has equally profound political implications. It has, moreover, much wider implications for the economic policy regimes of European countries which are associated with it. One can really speak of a "push towards politicalization" as a result of the agreement on European monetary union (Schneider 1991, p. 55). "Given the Member States' different political, economic and social priorities as well as perceptions, a single currency could only be introduced on the basis of a broad political package which reconciled different priorities and eased different perceptions. Most important, this package had to assure that the costs and benefits, but also the risks, were balanced out and equitably distributed during the run-up to the introduction of a single currency as well as afterwards" (Reeh 1993, p. 222).

This article analyzes the problems and trends of improving the economic integration of the European Union (EU) in modern conditions. It analyzes the key challenges that the EU faces in the process of deepening integration and creating a common market. Carrying out an in-depth review of economic integration in the EU, the article reveals the main challenges facing European leaders and institutions.
 The problems of the international economic integration of European countries into the system of relations of the European Union have recently become more and more urgent. The relevance of the chosen topic is determined by the fact that in the modern world, the problems of economic and international integration have gained importance, integration communities play an increasingly important role in global economic and political processes, accordingly, a constant analysis of their activities is necessary for timely amendments to the current, rapidly changing integration processes.
 First of all, the article focuses on issues of deep integration, such as the single currency - the euro, common fiscal policy and the European budget. The authors analyze how successful these initiatives were and whether they managed to achieve harmonization of the economic policies of all EU member states.
 The second aspect considered in the article is the issue of inequality between regions and countries within the EU. The authors analyze how regional differences in the economy can threaten the stability of the EU and what measures are being taken to reduce these inequalities.
 In addition, the article highlights the external challenges facing the EU in the context of geopolitical changes and global trade relations. It also examines the impact of various factors, such as Brexit and EU enlargement, on integration processes.
 The article highlights key trends such as the strengthening of the role of the euro, the development of the digital single market and the expansion of common rules and regulations. Attention is also drawn to the influence of new members and possible withdrawal from the EU on the integration process.
 The general conclusion of the article is that the economic integration of the European Union remains important and relevant, but requires constant adaptation to changes in the global economic environment. To ensure stability and prosperity, the EU needs to constantly improve its integration strategies and find solutions to the important problems it faces.

The decision of Maastricht to create a political union and in particular to move towards a single currency constitutes something of an intellectual puzzle. Why did political leaders agree to cede the most important economic function of the modern state to a supernational authority? And why was the decision taken in 1991 rather than 1981 or 1961? This book attempts to answer these questions by adapting William Rikers's federalism theory to the European case. Part I of the book makes the claim that by the late 1980s political elites in all the EU member states had become convinced that inflation must be controlled at all costs and that the only way of ensuring this was the adoption of a single currency policy policed by an independant European bank. Alternative policies based on economic nationalism were discredited and no major political party in any of the EU states dissented from the single currency solution. The commitment to the resulting federal bargain became evident during the currency crisis of 1992 and 1993 when governments of both left and right pursued deflationary policies in the midst of a recession in order to retain their credibility as potential candidates for monetary union. Part II considers the viability of union by examining the relationship between fiscal centralization and political centralization in Europe and in other federations. It is argued that given the variations among member states, European union can only work with a relatively strong federal government accountable via Europe-wide political parties operating in a powerful European Parliament. The book concludes that European political union is not tenable in the absence of these fundamental changes.

In the past 20 years, the European Union (EU) has become part of health policymaking to an extent that few commentators would have predicted. But the EU’s positive contributions as an advocate for public health have been overshadowed by the effects of its internal market regulation and centralized fiscal governance on the health of Europeans. Three things happened in Maastricht 20 years ago. European heads of state met to celebrate the completion of the internal market as prefigured in the Single Europe Act, agreed to create a common currency and added the first clear and positive words about health to the Treaties. This first mention of health was the harbinger of more effective promotion of health issues within EU policymaking.1 In time, however, the internal market and the single currency have had the biggest health consequences of the three.2 Putting aside some specific areas of EU competency created under the public health power, such as blood safety, the public health language in the treaties as they stand authorizes EU action, obliges the EU to take health into account and clarifies that it does not have a role in the organization and finance of health care services. Within this framework, most of EU public health policy is expenditure. This means it is limited. EU expenditures as a percentage of gross domestic product (GDP) are nowhere near as much as a member state health system spends, and health is a tiny share of EU expenditures (the EU member states’ average expenditure on health in 2012 was 9% of GDP, according to …

In this chapter we examine one of the most important economic issues ever tackled by the European Union (EU), namely, European Monetary Union (EMU). In January 1994 the European Union was expanded from 12 to 15 members following the accession of Austria, Finland and Sweden. The EU countries have a commitment to free trade between each other as well as permitting free movement of labour and capital between member states, and in addition they have a common trade policy vis-a-vis the rest of the world. By 1992 the member states had created a so-called ‘single market’ by tackling non-tariff barriers. The increasing integration of the member states’ Economics into a single market inevitably raised the issue of whether this market should be served by a single currency.

PurposeThis study aims to research the effects of unemployment wages current account and consumer price index (CPI) on the real gross domestic product (RGDP), which, in the optimum currency area (OCA) theory, supposes that countries with higher factor mobility can significantly profit from the currency area. However, in this study, it is shown that the considered optimum currency crisis (OCC) model is affected by mobility factors, as the defined theory has not been perfectly realised in the Eurozone.Design/methodology/approachIn this study, Breusch–Pagan–Godfrey and Lagrange multiplier (LM) tests are used for supporting the survey for better estimation of the panel cointegration tests, where Pedroni's (1995, 1997) technique is used. The unit root tests are employed, of which the Phillip–Perron and augmented Dickey–Fuller tests (unit root test, Dickey, D. and W. Fuller, 1979) are considered.FindingsIt can be concluded that demand shocks will tend to be more asymmetric instead of being symmetric, even though they are in the customs union (CU). However, Polish workers in a given scenario may move to Germany, but because of the rigidity of the labour market and qualification differences between workers, the interregional integration of member countries is reduced, and this reduces the absorption of asymmetric shocks. In Germany, where strong employment protection and rigidity are observed in comparison to Poland, although there has been historical migration and economical collaboration, unfortunately, the integration of the two countries’ economies has not been realised.Research limitations/implicationsQuantitative research on fiscal union and the estimation of its effects is not possible because there is no practical experience of fiscal union throughout the European Union (EU). However, quantitative research is used for estimating the effects of OCA in the Eurozone. Quantitative investigation is particularly focused on the monetary union and single currency and its impact on growth rate. In this study, the ordinary least squares (OLS) method and panel cointegration test are employed for estimating the effects of the considered variables.Practical implicationsThe Eurozone and the application of a single currency throughout the EU was a considerably difficult task. In addition, the adoption of a single currency was not easy for those member countries that fulfilled the “convergence criteria” (or “Maastricht criteria”) and who joined the Eurozone, because only adoption is not enough; maintenance of those criteria is also required. This study analysed the application of the Eurozone in the light of the OCA of Mundel's theory.Social implicationsThe OCA is important for member countries’ economic relations. However, the application of a single currency is not easy and needs to be controlled and regulated to ensure best practises throughout the Eurozone. Monetary integration is not a simple process, and Eurozone countries’ financial difficulties affect each other’s markets’ indifferent aspects. Particularly in any market recession, demand shocks tend to have different effects. Furthermore, in comparison to the monetary union, the CU has a considerable impact on trade enlargement.Originality/valueIn this study, the effects of the independent variables “wages, unemployment, CPI and capital flow” on the dependent variable “RGDP” is considered, which, in the OCA theory, supposes that countries with higher factor mobility can significantly profit from the currency area. In application, it was turned into crisis because of inadequate monetary and fiscal application. In this paper OCA is questioned in the light of the Eurozone for bringing better understanding to these difficulties. The considered model and estimations are used for evaluating to create sustainable monetary integration for economic growth.

Keynes died before the initiation of measures for economic and political union in Europe. However, he did have very clear views about the limitations on national policy space of an international standard which apply pari passu to the single European currency and to the problems created by international capital flows which have been part of the movement to a Single European market. At the same time, his proposal for an International Clearing Union, which was rejected in favour of the US proposl for a International Stabilisation Fund at Bretton Woods, provided the framework for one of the most important institutions in European Recovery proposed under the US Marshall Plan: the European Payments Union. Richard Kahn, one of Keynes collaborators put forward a regional version of the Keynes Plan, the ‘Discount Scheme’ which provides an indication of how Keynes might have evaluated the EPU. Based on Kahn’s proposal, a possible modern application of Keynes’s ideas on a sub-regional level is proposed as a means of avoiding the drawbacks Keynes noted of a single currency with open capital markets.

It is often pointed out that the creation of the single European market represents in itself a challenge for national European trade unions and industrial relations systems. A challenge for what, from Commons on, is considered the main task of trade union action: that is, to "take wages out of competition" and to offer workers a shelter against "the increased competitive menace" . To these challenges, the process towards the Economic and Monetary Union (EMU) and the creation of a single European currency, as it has been envisaged by the Maastricht Treaty, will add new, specific effects. Indeed, this is already occurring, as 1999 gets closer and closer, with the certainty that, despite the severe and politically divisive budget policies that all European governments are forced to adopt, only a small group of countries will qualify from the beginning for the third stage, opening up the problem of the relationships between EMU and non-EMU countries. In the following pages I will consider the specific problems implied by EMU for trade union action. They can be divided into two groups: one is related to the process, now underway, conducive to the creation of the single currency itself, and derives from the costs of meeting the Maastricht requirements (section 2); the second is connected with the consequences of EMU once the process has been accomplished and the single currency established, and with the new scenario that will then be open to economic and social actors (section 3 and 4).

The Nordic states all participate in European integration, but to different degrees and through somewhat different institutional arrangements. Finland has been a full European Union (EU) member since 1995, and it is the only one of the four states discussed in this chapter that has adopted the EU's single currency. Sweden has been a full EU member since 1995, but it decided unilaterally not to adopt the Euro. Denmark, an EU member since 1973, has a formal opt-out from European Monetary Union (EMU) and three other policy areas (citizenship, civil law and defence). Norway is perhaps best describers as a 'quasi-member' of the EU: despite two referendum decisions against joining the EU, the country is closely involved in most aspects of EU policy through the European Economic Area (EEA) and Schengen. The fifth Nordic country, Iceland (which is not covered in the present chapter), applied for full EU membership in 2009 (and is in the EEA and Schengen). The four 'mainland' states have all held referendums on European integration, and all but Finland have seen their governments defeated by popular vote. This chapter explores the political processes and patterns of Euroscepticism that have produced these different forms of participation in European integration, and some of its practical consequences.1 KeywordsEuropean UnionEuropean IntegrationEuropean Monetary UnionEuropean Economic CommunityVariable GeometryThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

T he gross domestic product of the European Union (EU) bloc is roughly equivalent to that of the United States, but the EU invests $60 billion less a year (around 33%) in R&D than does the United States. This disparity exists even in the slightly larger group of countries that soon will make up the EU research system (a total of nearly 30 countries). Part of this differential is due to less investment by European enterprises and part to less public funding of science. To ensure that Europe can remain competitive and participate in burgeoning global scientific collaborations, it is imperative that the EU both increase investment in R&D and renew its collaborative mechanisms. Looking at Europe as a whole, the administration of science and technology has been a loose conglomerate of individual European countries in combination with that promoted by the European Commission (EC) in Brussels. Most of the collaborative structures in European science [such as CERN, the European Molecular Biology Organization, European Molecular Biology Laboratory (EMBL), European Science Foundation, and European Synchrotron Radiation Facility] were established in the early 1970s. Since then, Europe has developed a single market and a single currency and is working toward a single defense policy and fiscal harmonization, but the organization of science has been trailing behind and is fragmented and, therefore, duplicative—the benefit of joining forces is not being maximized. Europe needs to move beyond this limited set of mechanisms for coordinating the research effort. The imperatives of increased competitiveness and collaboration must be nurtured at the European level. The ESF Collaborative Research Programmes (EUROCORES) is attempting to do this by bringing together national collaborative research funding in a coordinated manner to address new and important topics. A multinational approach is unavoidable, but it will profit from a common call for proposals and the establishment of a network of funders. The aim of this and other initiatives is to enhance collaboration between countries and their national and international research organizations (as we have seen in the case of EMBL and its associated structures[*][1]), lubricated by the EC, as the key for the construction of a true Europe of science. In an attempt to address these issues, Commissioner Philippe Busquin, in charge of research in the EC, is promoting the establishment of a European Research Area (see ). The positive reaction to this initiative from ministers for research of EU countries suggests that science in Europe will not be allowed to fall behind. Indeed, a recent debate in Lisbon, hosted by Portuguese Minister Jose Mariano Gago, between the research ministers, Commissioner Busquin, and a number of Nobel laureates and representatives from European scientific (academic and industrial) organizations concluded that despite the present reasonably good health of science in Europe, further support is needed, in terms of both political commitment and increased funding for basic research. Further support has come from the European Council (Heads of Governments) summit in Lisbon in March 2000, which, as well as endorsing the EC's initiative for better integration and coordination of research activities at national and EU levels, also noted that the provision for an EU-wide broadband network, facilitating researcher mobility, and retaining high-quality research talent within Europe are key issues that must be addressed within a short time. It is clear that whether in Europe, the United States, or any other part of the world, scientists need new and better mechanisms for collaboration. It is also clear that the mechanisms for international and intercontinental collaboration are not in place. The advent of new technologies in communications, particularly the new broadband capabilities, is making global collaboration increasingly easy, and it seems likely that such collaborations will ultimately become the norm. This requires new ways of conducting research, such as remote control of experiments and interaction with large dispersed databases and models. It also requires new administrative mechanisms that are unbureaucratic, efficient, free of political objectives, and operate between research organizations. The responsibility for developing these mechanisms is firmly on the shoulders of the science administrators and the politicians. The solutions that the EU develops for breaking down its own boundaries to research may help provide a model for the rest of the world. [1]: #fn-1

This article discusses the institutional evolution of the European Union (EU) in reacting to the euro zone crisis and the new forms of differentiation in the EU. It presents and elaborates several arguments. First, despite calls to complete the creation of the “genuine Economic and Monetary Union“ and to make a step towards federal structure of the Union with single currency and single central budget used to react to asymmetric shocks, most decisions actually agreed upon by member states since the start of the crisis can be seen as attempts to avoid exactly such a scenario. Second, although the divide between the “Northern“ and “Southern“ groups of the EU member states seems attractive in its simplicity, it is a gross simplification of the current situation and hides important differences of member state preferences within each of the groupings. Third, it is also too simplistic to see the membership in the euro zone as the main characteristic defining the state of differentiation in the EU. As it is discussed in the text, both euro zone member states and EU countries outside the euro zone participate in different initiatives of integration and show different national preferences. Finally, the text concludes with a formulation of the main policy dilemmas for Lithuania in terms of ongoing process of complex differentiation and taking into account the prospect of joining the euro zone in 2015.

Members of the European Union (EU) have long attempted to unify their monetary policies, whether by fixing exchange rates or moving toward a single currency. The success of these attempts has varied over time, and among EU member states. This article argues that the degree to which a country is integrated into EU trade and finance has a major impact on its willingness to make the sacrifices necessary to pursue monetary integration, especially stability against Europe's anchor currency, the Deutsche Mark (DM). Higher levels of intra-European trade and investment increase the desirability of stabilizing exchange rates between European countries. Statistical evidence indicates that greater integration of goods and capital markets is associated with greater success in fixing national exchange rates against the DM. This implies that pressures for monetary integration will continue but will vary among countries, along with the degree to which they are economically linked to European trade and investment.

The introduction of a single currency covering the majority of European Union (EU) member states is a momentous event which will have profound consequences for people across the Continent and beyond. The Euro will become the currency in which individual citizens are paid and denote the price of all goods, services and labour across the whole Economic and Monetary Union (EMU) zone. Thus, a coin minted in France will be legal tender in Germany, Italy and Belgium, creating a greater transparency of transactions in the process. More importantly, monetary union requires the transfer of monetary and exchange rate policy from each participating nation state to a central authority, in this case the European Central Bank (ECB) based in Frankfurt, which will operate a uniform monetary policy for the entire single currency region. Therefore, Finland, Spain and the Netherlands will each have an identical interest rate, set by the ECB for the benefit of the participating nations as a whole. In addition, to ensure that divergent fiscal policy does not destabilize the currency union, individual countries will be subject to commonly accepted constraints upon their budget deficits which, if they were to rise above a target rate of between 1 and 3 per cent, would result in the country being fined by the EU. Thus, discretionary national macroeconomic management will be largely superseded by rule-based economic co-ordination, which is intended to sustain monetary union whilst creating ever closer economic union between participating member states.KeywordsInterest RateEuropean UnionMonetary PolicyFiscal PolicyWorld Trade OrganizationThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Monetary and Fiscal Aspects of the European Union's Enlargement