European Monetary Union

The European Monetary Union (EMU) is the union of 20 EU states under a common currency – the euro.

Timeline:

• 1992: the Maastricht Treaty sets the rules (max. 3% deficit, 60% debt ratio)
• 1999: the euro as book money (financial markets, transfers)
• 2002: euro cash introduced (replacing the Deutsche Mark, franc, lira, etc.)
• 2024: 20 member states, over 340 million people

Advantages:

✅ No currency exchange when travelling within the eurozone
✅ Easier trade between EU countries
✅ Price stability (the ECB has an inflation target of 2%)
✅ Stronger negotiating position vis-à-vis the dollar/yuan

Challenges:

❌ Differing economic strength (Germany vs. Greece)
❌ No common fiscal policy (each country has its own budget)
❌ The euro debt crisis of 2010–2012 revealed the weak points