ABSTRACT
When the euro was launched on 1 January 1999 economic governance in the euro zone made a decisive shift to the EU level. Economic and Monetary Union (EMU) represents a profound increment in the political power of the EU, with a new EU institution, the European Central Bank (ECB), controlling the money supply, interest rates, and the exchange rate between the monetary union and the rest of the world. The exchange rates between member countries’ currencies were permanently fixed and the euro became an electronic currency. EMU members also accept considerable limitations on their national fiscal policy as a result of the provisions of the Treaty on European Union (TEU – the Maastricht Treaty), which have been reinforced in the Stability and Growth Pact (SGP). The importance of EMU was magnified by its large membership, which was wider than anticipated. At its launch it encompassed 11 of the EU’s 15 member states, the “outs” being Denmark, Greece, Sweden, and the United Kingdom. Membership widened further when Greece joined on 1 January 2001. Powerful symbols of national sovereignty will cease to exist when euro notes and coins replace the national currencies of these countries in 2002.
