The Euro is the single currency of the European Union. It was first introduced in cashless form on Jauary 1st1999, following years of negotiation and preparation. Euro notes and coins will officially come into circulation on 1st January 2002 in the twelve participating countries.These countries are Germany, Belgium, the Netherlands, Luxembourg, Italy, France, Ireland, Spain, Portugal, Austria and Finland; Greece became the twelfth member when it joined the Euro on January 1st 2001.Any country that is a member of the European Union can join the Euro providing that they are able to pass economic tests set out by the Maastricht treaty. The treaty requires economies to have achieved certain levels of performance on areas such as inflation, public deficits and debts, exchange rates and interest rates. These targets ensure not only stable economic conditions but also a degree of convergence between the participating member states which allows the European monetary Union to function smoothly.The convergence criteria set out in the terms of the Treaty are that:•Annual government deficit must not exceed 3 per cent of the GDP (Gross domestic product)•Total outstanding government debt must not exceed 60 per cent of the GDP•The rate of inflation should be within 1.5 percentage points of the three best performing EU countries•The average long term interest rate must be within 2 percentage points of the average rate of the three countries with the lowest inflation rates•Exchange rate stability, which means that for at least two years the currency has kept within the normal fluctuation margins of European Exchange Rate (ERM)The final decision on whether a member state fulfils the requirements to enable adoption of the Euro rests ultimately with the European council. There is at this time no provision for a country that has joined the Euro to withdraw.The Economic and Monetary Union is the single currency area within the...
