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Briefing

Eurozone: The Euro

Appears in: Europe, North America, Markets, Eurozone, Currencies

Critical Issues

Background:

The EU's single currency officially came into being on January 1 1999, when exchange rates were fixed between an initial 11 member states, a group that was broadened to include Greece in 2001, Slovenia in 2007, Cyprus and Malta in 2008 and Slovakia in 2009. Euro coins and banknotes were issued in 2002. All EU members (with the exception of the UK and Sweden, which opted out of the euro at its inception) are required to join the single currency as soon as possible provided they meet the economic criteria. Monetary policy for all euro members is set by the ECB. The origins of the euro lie in the European Monetary System (EMS), which came into being in 1979 as part of an attempt by EU countries to prevent exchange rate fluctuations between their currencies following the U.S. government’s removal of the fixed link between the dollar and the official price of gold in 1971.

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Associated Readings

Opinions The Guardian Joseph Stiglitz May 5, 2010 Reform the euro or bin it Analysis Mizuho Corporate Bank August 2009 Mizuho Dealer’s Eye: Market will lack definitive direction Analysis TCW Jean-Charles Sambor and Didier Borowski Jun 04, 2009 Will the Dollar's Fall Trigger a Euro Overshoot? | India: The New Political Compass Analysis Bank of America Merrill Lynch Apr 16, 2009 ECB to weigh further on EUR | Emerging markets: fundamentals to resurface Analysis InvestorsInsight John Mauldin Feb 22, 2009 While Rome Burns Analysis Societe Generale Jan 19, 2009 Crunch time for the euro? Eurozone fiscal developments weigh on the euro | EMEA currencies to remain under pressure Research New York University and University of New Hampshire Roman Frydman and Michael D. Goldberg Nov 10, 2007 The Dollar-Euro Exchange Rate and the Limits of Knowledge Analysis Morgan Stanley Stephen Jen and Spyros Andreopoulos Oct 20, 2008 Currencies: De Facto Dollar Zone versus De Facto Euro Zone Analysis Morgan Stanley Global Economic Forum Stephen Jen and Luca Bindelli Aug 01, 2008 EUR/USD Fair Value: Views from Stuttgart and Sicily

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