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"The European Union is the world’s biggest economy and since the creation of the euro has the world’s second most important international currency. It has demonstrated a unique capacity to advance regional integration and to develop and renew its social model. But Europe is also facing new challenges which call for action. It is enlarging, ageing, continuously integrating but also opening to the rest of the world. And the world is changing too.... Building on its extraordinary history of achievement, Europe not only has what it takes to survive in the new global environment with an ageing society; it has also what it takes to thrive and prosper."
– Joaquín Almunia
EU Economic & Monetary Affairs Commissioner
The launch of the euro on January 1, 1999, and the introduction of euro notes and coins on January 1, 2002, mean that the EU has achieved a long-standing ambition to cement closer economic integration with a single European currency. Economic and Monetary Union (EMU) is now a tangible reality in 12 EU Member States, accounting for around 1/6 of global output. As a monetary integration scheme, EMU is without precedent in terms of its scale and complexity, and it is unique in that it combines centralized conduct of monetary policy by the European Central Bank (ECB) with national sovereignty over fiscal and other economic policies. EMU also represents the single most important change in the global economic system since the collapse of the Bretton Woods system of fixed exchange rates in the early 1970s.
Over the years, the EU has established deep and lasting economic linkages with the US, as can be seen in the significant trade and investment flows between the two economies. This relationship is one of the central features of the global economy. The size of the European Union economy, as measured by Gross Domestic Product (GDP), was US$12.3 trillion in 2005 (compared to US$11.7 trillion GDP in the United States), and the EU has a population of over 450 million (compared to a population of nearly 300 million in the US).
Economic and Monetary Union and the Euro Area
Economic and Monetary Union is one of the objectives of the EU. Twelve Member States have already adopted the euro as their currency (Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland). These countries are collectively referred to as the "euro area." The euro area countries together boast a population of approximately 310 million, or 4.9% of the world's population. And with a 15% share of world GDP in 2005, the euro area is the world’s second largest economy after that of the United States. On January 1, 2007, Slovenia will also adopt the euro and join the euro area, becoming the first of the new Member States that joined the EU in 2004 to do so. Most of the other new Member States aim to join the euro area between 2008 and 2010.
"After several years of sluggish performance, the recovery is now on a solid footing in the euro area. Economic growth accelerated to an annualised rate of 3.4% in the first half of 2006, the fastest pace in 6 years." Quarterly Report on the Euro Area, October 2006.
The Benefits of the Euro
- CITIZENS: price transparency; easier travel with no currency exchange; lower interest rates.
- BUSINESSES: no exchange rate transaction costs; full benefits of the single market; financial market integration.
- MACROECONOMY: price stability (low and stable inflation); exchange rate stability; low interest rates.
- GLOBAL: greater diversity and currency choice; enhanced stability (even amid adverse world events that would have caused exchange rate turmoil pre-euro).
- POLITICAL: milestone step in European integration; enhanced global role.
The European Commission's Key Economic and Financial Policy Agencies
EU Economic & Monetary Affairs Commissioner Almunia (Left) with US Federal Reserve Chairman Ben Bernanke, April 2007
Economic and Financial Affairs Directorate General (ECFIN)
The main role of the Economic and Financial Affairs Directorate General (ECFIN) is to foster the success of Economic and Monetary Union both inside and outside of the European Union by advancing economic policy coordination, conducting economic surveillance and providing policy assessment and advice. One of ECFIN's key responsibilities is ensuring the smooth and efficient application of the Stability and Growth Pact, adopted in 1997 to provide a concrete way in which the EU can monitor individual Member States’ budgetary policies and maintain stable economic discipline throughout the EU internal market. EU Economic and Monetary Affairs Commissioner Joaquín Almunia also oversees the EU Statistical Office (EUROSTAT), based in Luxembourg, whose mission is to provide the European Union with a high-quality statistical information service.
Internal Market and Services Directorate General (MARKT)
The Internal Market and Services Directorate General's central mission is to secure—for the benefit of the Union’s citizens and businesses—ever greater European market integration and to seek the removal of obstacles to the free movement of services and capital and to the freedom of establishment. The Directorate General designs and delivers policies of economic reform that make the Union’s economy dynamic and competitive. In the area of financial services, it aims at establishing the legal framework for the integration of the Union’s capital markets and the creation of a single market for financial services. The EU Internal Market and Services Commissioner is Charlie McCreevy.
Directorate General Employment and Social Affairs (EMPL)
The EU Employment, Social Affairs and Equal Opportunities Directorate General has the task of contributing to the development of a modern, innovative and sustainable European Social Model with more and better jobs in an inclusive society based on equal opportunities. It plays a key role in promoting positive interaction among economic, social and employment policies. The EU Employment, Social Affairs and Equal Opportunities Commissioner is Vladimir Špidla.
European Union Delegation, Washington, DC, Staff
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European Commission Websites
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| The two 2007 Euro Challenge (http://www.euro-challenge.org/) winning teams visited the European Commission's Washington Delegation on May 22, 2007. The first-place team, Montclair High School, and the second-place team, Bronx School of Science, prevailed at an early-March match at the Federal Reserve Bank of New York. Ninth- and tenth-grade students (aged fourteen to sixteen) on twenty-three teams from New York, New Jersey and Connecticut competed this year. Pictured along with the victorious teams are their faculty advisors; European Commission Washington Delegation Economic & Financial Section Head Nigel Nagarajan; European Commission Washington Delegation Senior Economist Amy Medearis; Moody's Foundation Program Director Daisy Auger-Dominguez; Working in Support of Education's Kristy Nguyen; Embassy of Spain Financial Counselor Ubaldo Gonzalez; German Marshall Fund's Richard Salt; European Commission official at the World Bank Pilar Garcia-Martinez. The trip to Washington, DC--where team members also visited the Federal Reserve Board and the International Monetary Fund--was generously funded for the winners by the Moody's Foundation. |
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