Chapter 20 Optimum Currency Areas and the European Experience 国际财务相关管理课件.pptVIP

Chapter 20 Optimum Currency Areas and the European Experience;Introduction;Figure 20-1: Members of the Euro Zone as of January 1, 2001;Table 20-1: A Brief Glossary of Euronyms;European Currency Reform Initiatives, 1969-1978 The Werner report (1969) It set out a blueprint for the stage-by-stage realization of Economic and Monetary Union by proposing a three-phase program to: Eliminate intra-European exchange rate movements Centralize EU monetary policy decisions Lower remaining trade barriers within Europe Two major reasons for adopting the Euro: To enhance Europe’s role in the world monetary system To turn the European Union into a truly unified market;German Monetary Dominance and the Credibility Theory of the EMS Germany has low inflation and an independent central bank. It also has the reputation for tough anti-inflation policies. Credibility theory of the EMS By fixing their currencies to the DM, the other EMS countries in effect imported the German Bundesbank’s credibility as an inflation fighter. Inflation rates in EMS countries tended to converge around Germany’s generally low inflation rate. ;Figure 20-2: Inflation Convergence Within Six Original EMS Members, 1978-2000(P611);The EU “1992” Initiative The EU countries have tried to achieve greater internal economic unity by: Fixing mutual exchange rates Direct measures to encourage the free flow of goods, services, and factors of production The process of market unification began when the original EU members formed their customs union in 1957. The Single European Act of 1986 provided for a free movement of people, goods, services, and capital and established many new policies. ;European Economic and Monetary Union In 1989, the Delors report laid the foundations for the single currency, the euro. Economic and monetary union (EMU) A European Union in which national currencies are replaced by a single EU currency managed by a sole central bank that operates on behalf of all EU members.;Three stages of