Warm up

Questions

  • What is the Euro?
  • What can the Euro do for the economic growth of the European Union, and what has it achieved so far?
  • To establish a single unified European market, what else should be done in addition to the adoption of a single currency?
Background

    The Euro

  • he Euro is the monetary unit and currency of the European Union (EU). It was introduced as a non cash monetary unit in 1999, and currency notes and coins appeared in participating countries on January 1, 2002. After February 28, 2002, the euro became the sole currency of member states, and their national currencies ceased to be legal tender. The euro is represented by the symbol �.
  • The Euro's origins lay in the Treaty on European Union (1991)　－ also known as the Maastricht Treaty – an agreement among the then 12 member countries of the European Community (now the European Union) — United Kingdom, France, Germany, Italy, Ireland, Belgium, Denmark, The Netherlands, Spain, Portugal, Greece, and Luxembourg — that included the creation of an economic and monetary union (EMU). The treaty called for a common unit of exchange, the euro, and set strict criteria for conversion to the euro and participation in the EMU. These requirements included annual budget deficits not exceeding 3 percent of gross domestic product (GDP), public debt under 60 percent of GDP, exchange rate stability, inflation rates within 1.5 percent of the three lowest inflation rates in the EU, and long-term inflation rates within 2 percent. Although several states had public debt ratios exceeding 60 percent — the rates topped 120 percent in Italy and Belgium—the European Commission (the executive branch of the EU) recommended their entry into the EMU, citing the significant steps each country had taken to reduce its debt ratio.
  • Supporters of the euro argued that a single European currency would boost trade by eliminating foreign exchange fluctuations and reducing prices. Although there were concerns regarding a single currency, including worries about counterfeiting and loss of national sovereignty and national identity, 11 countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal, and Spain) formally joined the EMU in 1998. Britain and Sweden delayed joining, though some businesses in Britain decided to accept payment in euros. Voters in Denmark narrowly rejected the euro in a September 2000 referendum. Greece initially failed to meet the economic requirements but was admitted in January 2001 after overhauling its economy. The participating countries became known as the euro area, euro land, or euro zone. (The euro is also the official currency in several areas outside the EU, including Andorra, Montenegro, and San Marino.) In 1998 the European Central Bank (ECB) was established to manage the new currency. Based in Frankfurt, Germany, the ECB is an independent and neutral body headed by an appointed president who is approved by all member countries to serve an eight-year term.
  • The euro was launched on January 1, 1999, replacing the ecu (a precursor of the euro) at a 1:1 value. Until the circulation of currency notes and coins in 2002, the euro was used only by financial markets and certain businesses. Many experts predicted that the euro—with a consumer market of some 300 million people—could eventually rival the dollar as an international currency.
  • Unlike most of the national currencies that they replaced, euro banknotes do not display famous national figures. The seven colorful bills, designed by the Austrian artist Robert Kalina and ranging in denomination from �5 to �500, symbolize the unity of Europe and feature a map of Europe, the EU's flag, and arches, bridges, gateways, and windows. The eight euro coins range in denominations from one cent to two euros. The coins feature one side with a common design; the reverse sides' designs differ in each of the individual participating countries.
Very important terms
the Euro 欧元
  • The monetary unit and currency of the European Union (EU). It was introduced as a non cash monetary unit in 1999, and currency notes and coins appeared in participating countries on January 1, 2002. After February 28, 2002, the euro became the sole currency of member states, and their national currencies ceased to be legal tender. The euro is represented by the symbol �.
equity 股权
  • Ownership interest in a corporation in the form of common stock or preferred stock. It also refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value.
equity investment 股权投资
  • Equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup (a company being created or newly created). When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk than investment in listed going-concern situations.
direct holdings and pooled funds 直接持有和共同的基金
  • The equities held by private individuals are often held via mutual funds or other forms of pooled investment vehicle, many of which have quoted prices that are listed in financial newspapers or magazines; the mutual funds are typically managed by prominent fund management firms (e.g. Fidelity or Vanguard). Such holdings allow individual investors to obtain the diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative usually employed by large private investors and institutions (e.g. large pension funds) is to hold shares directly in the institutional environment. Many clients that own portfolios have what are called segregated funds as opposed to, or in addition to, the pooled e.g. mutual fund alternative.