1. Introduction
1.1 The European Single Currency – The Euro
On 1 January 1999, a single European currency (the euro) was introduced in eleven EU countries. Greece has been participating in the euro area (or euroland) as its 12th member, since 1st January 2001. The countries of the Euro Zone are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Luxembourg, Netherlands, Portugal and Spain. The countries of the EU that remained outside the Euro land were the United Kingdom, Denmark and Sweden.
The twelve EU countries formed an economic and monetary union (EMU) and started using the single currency – the euro. These countries locked the exchange rates of their national currencies to the euro (for Greece 1€ = 340.75 GDR) and are sharing the new currency. However, euro notes and coins were introduced on 1 January 2002.
The twelve countries share a single interest rate, set by the European Central Bank (ECB), and a single foreign exchange rate. The ECB is responsible for the monetary policy of these euro zone countries.
Ever since the European Economic Community (EEC) was established in 1957, there were suggestions of more economic co-operation between countries – including a single currency. The late nineteenth century saw the Latin Union, a Single Currency area comprising France, Belgium, Switzerland and Italy. Within the EU itself, there have been two distinct periods when the currencies of Member States were locked together – in the currency Snake between 1970 and 1975, and in the Exchange Rate Mechanism between 1979 and 1993. Both succumbed to economic failure, triggering a combination of political and speculative pressures, which led to their collapse.
The creation of the Single Market in 1992 brought the economies of diff ...