History of economic integration in the EU
Apr 18 1951 - Establishment of the European Coal and Steel Community (Treaty of Paris)
Belgium, France, Germany, Italy, Luxembourg and the Netherlands signed the Treaty of Paris on the establishment of the European Coal and Steel Community, thus marking the beginning of the process of economic integration. This treaty was valid for 50 years and ceased to be in force in 2002.
Mar 25 1957 - Establishment of the European Economic Community (Treaty of Rome)
The Treaty of Rome, signed in March 1957, included only a few provisions regarding monetary policy cooperation between Member States of the European Economic Community (EEC).
This treaty did not include any provisions regarding the establishment of monetary union, as the period following the Second World War was characterised by international monetary stability and the predominance of the US dollar. Exchange rates were linked to the US dollar. Stability vis-à-vis the US dollar also meant stability between the currencies of then ECC Member States.
End of 1960s - Unstable exchange rates
Conditions in the global economy changed at the end of the 1960s. Stability between the currencies of then Members States was at risk.
Accordingly, ideas began emerging regarding increased coordination of the economic policies of Member States and closer cooperation in monetary matters. At a summit at the Hague in December 1969, the heads of state and government agreed that the establishment of EMU would become a formal goal of European integration.
Oct 8 1970 - Werner Report
The Werner Report of October 1970 included a three-stage plan for the establishment of economic and monetary union over the next 10 years. Basic economic and monetary decisions were to be made at the Community level. The proposed stages were as follows:
Reducing the fluctuation bands of Member States' currencies, broader economic policy guidelines at the Community level, coordinated budget policies and the preparation of changes;
- Integration of financial markets to facilitate the free flow of capital, progressive elimination of exchange rate fluctuations, closer coordination of short-term economic policies and budgetary and fiscal measures;
- Irrevocable fixing of conversion rates, convergence of economic policies and the establishment of a system of central banks at the community level.
- Based on the Werner Report regarding the establishment of EMU, the Council of Ministers adopted a resolution on the establishment of EMU in stages. However, due to changing economic conditions, this plan was never implemented.
1971 - End of the system of fixed conversion rates
In August 1971, the US dollar's convertibility to gold which, at the time represented the basis for monetary stability, was suspended.
The result was a widening of the fluctuation band of conversion rates vis-à-vis the US dollar. This marked the end of fixed conversion rates and triggered a wave of exchange rate instability. The EMU project was temporarily abandoned.
Apr 24 1972 - Snake in the tunnel
A special system referred to as the "snake in the tunnel" was established in April 1972 to limit the exchange rate fluctuations between the Six.
This system limited exchange rate fluctuations between Member States' currencies to fixed fluctuation bands (the snake), and the fluctuation of Member States' currencies vis-à-vis the US dollar (the tunnel).
This system came under pressure due to the oil crisis at the beginning of the 1970s, when the exchange rates of Member States' currencies fluctuated sharply. By March 1973, the "snake had already left the tunnel". Due to the oil crisis, the weak US dollar and differing economic policies, the majority of Member State currencies left the snake.
Jan 1 1973 - Denmark, Ireland and the UK become member of the EEC
Denmark, Ireland and the United Kingdom become member of the European Economic Community.
Dec 5 1978 - European Monetary System
The next step aimed at limiting exchange rate fluctuations of Member States' currencies was the establishment of the European Monetary System (EMS) in December 1978 at the meeting of the European Council in Brussels. The EMS entered into force on 13 March 1979, and is based on:
- the Exchange Rate Mechanism (ERM)
- a single European Currency Unit (ECU), and
- credit mechanisms.
The ERM represents a system of fixed, but flexible exchange rates. Within the ERM, the fluctuation between the exchange rates of participating Member State currencies was limited to +/- 2.25% from the bilateral rate, except for the Italian lira, which was allowed a margin of +/- 6%.
All the currencies of then Member States, with the exception of the United Kingdom, were included in the ERM. In 1993, the fluctuation band was widened to +/- 15%. The ERM underwent some changes with the introduction of the euro on 1 January 1999, and is now referred to as the ERM II.
Jan 1 1981 - Greece becomes a member of the EEC
Greece becomes a member of the European Economic Community.
1. januar 1986 - Španija in Portugalska postaneta članici EGS
Španija in Portugalska postaneta članici Evropske gospodarske skupnosti.
Feb 17/28 1986 - Signing of the Single European Act
The purpose of the Single European Act, signed in February 1986, was to establish an area without internal borders where the free flow of goods, people, services and capital is possible (the establishment of the internal market). In practice this meant eliminating trade barriers between Member States.
The Single European Act did not include provisions for establishing the EMU, but it did in its preamble recall that, in 1972, the heads of state and government approved the goal of gradually establishing the EMU.
The internal market cannot properly function as long as relatively high currency conversion costs and uncertainty linked to exchange rate fluctuation exist.
Apr 12 1989 - Delors Report
The report issued by the Delors Commission in April 1989 represents the plan for EMU and proposes that EMU be established in three stages.
The report propose the establishment of a monetary institution (the European System of Central Banks) that would be responsible for defining and implementing monetary and exchange rate policy.
The aforementioned report was approved at the meeting of the European Council in Madrid in June 1989, where it was determined that the first stage of EMU would begin on 1 July 1990.
At the meeting of the European Council in Strasbourg in December 1989, a call was made for an intergovernmental conference to define the necessary changes to treaties to enable the establishment of EMU.
The intergovernmental conference that began in 1990 led to the creation of the Maastricht Treaty, which contains provisions regarding the establishment of EMU in three consecutive stages according to a precise timetable.
Jul 1 1990 - Stage One of EMU
Stage one, which began on 1 July 1990 and ended on 31 December 1993, saw the removal of barriers to the free movement of capital (Member States were obliged to provide for the full liberalisations of capital flows).
Emphasis was also placed on the increased coordination of individual economic policies and strengthening cooperation between central banks.
Member States were also obliged to adopt measures relating to the prohibition of the financing of the public sector by the central bank and the prohibition of the public sector's privileged access to financial institutions.
Feb 7 1992 - Signing of the Maastricht Treaty
The result of the intergovernmental conference was the Treaty on European Union (the Maastricht Treaty), which set the establishment of EMU as a formal goal.
This treaty lays down the convergence criteria which need to be met for a Member State to participate in EMU, and contains provisions regarding the establishment of EMU in three consecutive stages in accordance with a precise timetable. The Maastricht Treaty entered into force on 1 November 1993.
Jan 1 1994 - Stage Two of EMU
Stage two began on 1 January 1994 and ended on 31 December 1998, and was marked by the establishment of the European Monetary Institute (EMI), the predecessor to the ECB. The EMI was tasked with strengthening cooperation between national central banks and coordinating the monetary policies of Member States. It was also responsible for preparations required for the introduction of the new single currency.
In this stage, Member States were obliged to strive to meet convergence criteria. The establishment of central bank independence was required. The currency make up of the ECU basket was frozen.
Jan 1 1995 - Austria, Finland and Sweden become members of the EU
Austria, Finland and Sweden become members of the European Union.
Dec 16 1995 - Naming of the euro and the Madrid scenario
At the meeting of the European Council in Madrid in December 1995, euro was confirmed as the name of the new single currency. The name was to be the same in all official EU languages, and was to replace the generic term ECU.
The standard abbreviation for the euro is EUR, while the graphic symbol is €. It was determined at the same meeting that the final stage of EMU was to begin on 1 January 1999. Basic elements of the currency changeover plan were also agreed.
Jun 16/17 1997 - Meeting of the European Council in Amsterdam
At the meeting of the European Council in Amsterdam, the Stability and Growth Pact was approved. The purpose of the pact is to ensure Member States' fiscal policy discipline.
The pact commits Member States to respect the medium-term goal of a balanced budget or budget surplus. A new exchange rate mechanism (ERM II) was also established. Its purpose is to ensure stability between the euro and the currencies of Members States that have not adopted the single currency.
May 3 1998 - Decision regarding which countries will adopt the euro
At the meeting of heads of state and government in May 1998 in Brussels it was decided that 11 Member States met the conditions for the introduction of the euro on 1 January 1999. They were: Austria, Belgium, Finland, France, Ireland, Italy, Luxembourg, Germany, the Netherlands, Portugal and Spain.
Jun 1 1998 - Establishment of the European Central Bank (ECB)
The European Central Bank (ECB) was established on 1 June 1998, and replaced the EMI. Wim Duisenberg of the Netherlands was appointed the first president of the ECB.
Dec 31 1998 - Fixing of conversion rates
The conversion rates for the currencies of Member States that adopted the euro were irrevocably fixed and applied for calculations from national currencies to euro. The euro replaced the ECU at a rate of 1:1.
Jan 1 1999 - Stage Three of EMU
Stage three began on 1 January 1999 with the introduction of the new single currency, the euro, and the transfer of responsibility for conducting monetary policy to the Eurosystem (the ECB and the national central banks of euro area countries).
The new central bank, namely the ECB, which was actually established on 1 June 1998, began operating and assumed the tasks of the EMI. Following verification of compliance with convergence criteria for the introduction of the euro, a decision was taken as to which Member States would participate in the stage three of EMU.
The conversion rates for the currencies of these countries were irrevocably fixed, the currencies becoming so-called subdivisions of the euro. The euro was introduced as book money in stage three. On 1 January 2002, euro bank notes and coins were introduced.
EU Member States were obliged to begin respecting the rules on economic policy coordination.
On 1 January 1999, the euro was initially introduced as book money only. The period from 1 January 1999 to 31 December 2001 represented a transition period in which the gradual transition to the euro was carried out for the entire economic area of euro area countries.
The principle of "no compulsion, no prohibition" was applied during this period with regard to using the euro. This means that economic entities were free to choose with regard to using the euro during the transition period. They were given the opportunity to use the euro, but were not bound to do so.
Financial markets began using the euro. The new public debt of euro area countries was denominated in euros.
Following the three-year transition period, euro bank notes and coins were introduced on 1 January 2002, gradually replacing the banknotes and coins of those countries that adopted the euro.
Sept 28 2000 - Danish euro referendum
In a referendum held on 28 September 2000, the people of Denmark rejected the introduction of the euro. The Danish krone remains part of ERM II.
Jan 1 2001 - Greece introduces the euro
On 1 January 2001, Greece introduced the euro, becoming the 12th Member State to join the euro area.
Jan 1 2002 - Introduction of euro banknotes and coins
Euro bank notes and coins were introduced on 1 January 2002, gradually replacing the banknotes and coins of those countries that adopted the euro.
Although the currencies of euro area countries, as subdivisions of the euro, ceased to exist on 31 December 2001, the banknotes and coins of legacy currencies retained the status of legal tender for some time, and were used for payments until 28 February 2002.
This was know as the period of "dual circulation", as payment with both euro banknotes and coins and the banknotes and coins of euro area countries was permitted.
The period of dual circulation ended on 28 February 2002. This period was shorter in some countries, depending on the decision of an individual euro area country and its national plan for changing over from the domestic currency.
Since 1 March 2002, the euro is the only legal tender in euro area countries. Euro banknotes and coins were successfully introduced in these countries. More than 15 billion euro banknotes were printed and approximately 52 billion euro coins minted.
The banknotes and coins of the legacy currencies of euro area countries (DEM, ATS, ITL, etc.) are no longer legal tender, and may only be exchanged at the national central banks of the euro area countries where they were issued.
Feb 28 2002 - Withdrawal of national banknotes and coins
The banknotes and coins of the legacy currencies of euro area countries retained the status of legal tender until 28 February 2002 (some lost their status earlier, depending on the national currency changeover plan).
Thus the banknotes and coins of the legacy currencies of euro area countries were gradually withdrawn from circulation and replaced with euros until that date.
Sept 14 2003 - Swedish euro referendum
In a referendum held on 14 September 2003, the people of Sweden rejected the introduction of the euro.
May 1 2004 - Accession of 10 new Member States to the EU
Ten new Member States joined the European Union: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
Pursuant to European legislation, these countries did not simultaneously adopt the euro when they joined the EU, but will introduce it in time, as they meet the conditions for doing so.
Jun 27 2004 - The Slovenian tolar, Estonian kroon and Lithuanian litas included in ERM II
The Slovenian tolar, Estonian kroon and Lithuanian litas were included in ERM II.
Central exchange rates, valid as of 28 June 2004, were set (EUR 1 = SIT 239.640). The exchange rates are permitted to fluctuate +/-15% from the central exchange rate.
Apr 29 2005 - The Cyprus pound, Latvian lats and Maltese lira included in ERM II
The Cyprus pound, Latvian lats and Maltese lira were included in ERM II. Central exchange rates, valid as of 2 May 2005, were set.
Nov 25 2005 - Slovakia koruna included in ERM II
The Slovakian koruna was included in ERM II. A central exchange rate, valid as of 28 November 2005, was set.
Jan 1 2007 - Euro introduced in Slovenia
After meeting all necessary criteria, Slovenia became the 13th member of the Eurosystem on 1 January 2007.
Jan 1 2008 - Cyprus and Malta introduce the euro
On 1 January 2008, Cyprus and Malta became the 14th and 15th members of the Eurosystem with the introduction of the single currency.
Jan 1 2009 - Introduction of the euro in Slovakia
On 1 January 2009, Slovakia introduced the euro, becoming the 16th member of the Eurosystem.
Jan 1 2011 - Introduction of the euro in Estonia
On 1 January 2011, Estonia introduced the euro, becoming the 17th member of the Eurosystem.
Jul 1 2013 - Accession of Croatia to the EU
Croatia joined the EU on 1 July 2013.
Jan 1 2014 - Introduction of the euro in Latvia
On 1 January 2014, Latvia introduced the euro, becoming the 18th member of the Eurosystem.
Jan 1 2015 - Introduction of the euro in Lithuania
On 1 January 2014, Lithuania introduced the euro, becoming the 19th member of the Eurosystem.