Recently members of the European Community have proposed the "Euro" as the name of a united currency. The idea for a common currency is not a new one. For years European banks have been using ECUs as the basis for the European Monetary System and it will now be exchangeable equally for new Euros. ECU stands for European Currency Unit, and is defined in terms of pieces of European currencies, making it a composite currency of all European countries. Since its creation, it has commonly used as a currency of denomination for eurobonds and bank certificates of deposit. In March 1979 the European Monetary System was launched, and the goal toward a united currency was started. The system was based on the average behavior of the participating countries of the European Community. All European economies were examined, and observed to measure their effect of the monetary system. Average inflation was good but too much departure from that average would produce problems in the system. If the community average were 5 percent inflation, but the country's inflation with either 0 percent or 10 percent inflation, it would cause strains in the system. All this economic coordination took place through a country's exchange rate. A country was on track just as long as its exchange rate with respect to the ECU did not depart too much from a fixed value the ECU central rate. The Maastricht Treaty proposed additional criteria other than exchange rates, which was finally approved in May 1993 despite a holdout from some countries in the European Community. The Treaty set out three stages of further transition to monetary union in Europe The first stage was to have been completed by January 1994, and involved the elimination of all restrictions on the movement of capital between Member States, and between Member States and third countries. However, that goal was not met completely (Santer, Jacques).After January 1994, the second stage began with the creati...
