Economic and Monetary Union

Development of a unitary economy across the member states of European Union (EU) with a single currency, single market, and harmonized interest and taxation rates. In June 1989, the European Council decided to initiate moves towards EMU from 1 July 1990, on the basis of a report by Jacques Delors, the then president of the European Commission. The Maastricht Treaty then set out a timetable and criteria for the achievement of EMU and agreed to the future establishment of a single European currency, the euro.

The first stage of EMU lasted until 31 December 1993, concentrating on the liberalization of capital movements, the closer coordination of economic policies by member states, and closer cooperation between central banks. The second stage, from 1 January 1994, included the establishment of a European Monetary Institute (since superseded by the European Central Bank) to further strengthen national bank and monetary policy coordination. In December 1995, the European Council confirmed that the third stage of EMU, the introduction of the euro, would begin on 1 January 1999. Participating member states had to satisfy certain convergence criteria on inflation rates, government deficit levels, currency fluctuation margins, and interest rates. In May 1998, 11 of the then 15 member states agreed take part in the single currency from its launch date. The UK, Denmark, and Sweden opted out, and Greece initially failed to meet the economic convergence criteria, but joined on 1 January 2001.

Euro notes and coins were introduced in 1 January 2002, circulating in parallel with national currencies for two months. Thereafter the national currencies were abolished.