The Single European Act and the Delors Report (1989)
The Single European Act (17.2.1986) enshrined in law some of
the major economic preconditions for ‘fair and loyal’ competition
and long-term stability within the internal market. It introduced a
new article (Article 102a) in the EEC Treaty concerning EMU and co-operation
between Member States in this field, with special reference to the
EMS and the development of the European Currency Unit (ECU).
The debate on EMU was fully re-launched at the
in June 1988, asking an ‘ad hoc
Committee’ of the Central
Bank Governors of the twelve Member States, chaired by the President
of the Commission, Jacques Delors, to propose a new timetable with
clear, practical, realistic steps for creating an economic and
liberalising capital movements, which was widely considered to be a
logical first step for a common currency area, had been adopted at
the same time, coming into force in July 1990, and as some of the
major economic preconditions for EMU (such as aspects of tax
harmonisation and fair competition) had already been ‘legally
solved’ by the Single European Act of 1987, this new mandate for EMU
made it possible to concentrate on the institutional aspects of a
monetary union, particularly on the organisation of the European
System of Central Banks and on aspects of economic and monetary
stability (no public access to central bank money, no bailing out of
public liabilities, excessive deficit procedure, etc.).
report on EMU in the
European Community drafted by the Delors Committee was presented to
the public in April 1989. The report’s recommendations were reached
unanimously. It favoured the approach of making substantial steps
towards economic convergence, price stability and budgetary
discipline before irrevocably fixing the exchange rates between the
currencies in a monetary union. The Committee therefore recommended
a move towards economic and monetary union in three distinct stages.
The run-up to the Maastricht Summit
Accepting the ‘Delors report’ as a useful basis for further work on
EMU, the Madrid European Council
decided in June 1989 to begin the process of
creating a single currency with the first stage starting on 1 July
1990. In Strasbourg in December 1989, the
European Council agreed to convene an
Intergovernmental Conference (IGC) on EMU before the end of 1990, in
particular to make the necessary changes to the treaty for an
economic and monetary union.
The preparations started in the meeting of the Council of Economic
and Finance Ministers (ECOFIN) in July 1990) with the presentation of the report by the Monetary
Committee. The report’s recommendation of a single monetary policy
and a single currency was supported by 11 Member States (all Member
States except the United Kingdom).
The IGC on EMU opened alongside a second IGC on political union in
December 1990. The view that the single market and any economic
union would not be complete without a single currency was expressed
in a document prepared by the Commission and was generally accepted at the IGC.
In this document, adopted in August 1990, the Commission stressed
four elements which it considered to be the basis of a true economic
and monetary union:
- Monetary policy must be defined and implemented by a new Community
institution, a European Central Bank.
- The primary task of the European Central Bank would be to assure
price stability and it should act independently from political
- Close convergence of national economic policies based on budgetary
discipline by the Member States was necessary.
- The European Currency Unit (ECU) should become Europe’s future
single currency 1).
The Maastricht Summit and its outcome
The two IGCs were closed at the Maastricht Summit on 9/10 December
1991. They resulted in the creation of a political union, to be
called the “European Union”, and of a series of amendments to the
EEC Treaty, leading to an “Economic and Monetary Union”.
Both unions were enshrined in the
‘Maastricht Treaty’, which was
ratified by the European Parliament in April 1992 and signed by the
Heads of State or Government in May. However, it only came into
force on 1 November 1993. This delay was due to difficulties in the
ratification process in some Member States, in particular due to the
need for a second referendum in Denmark.
With the "Treaty of Maastricht", the Member States confirmed their
political will to realise an Economic and Monetary Union, although
exceptions were made for Denmark and the United Kingdom in terms of
when they would join it.
In parallel, in economic and financial circles there was a growing
conviction that a European Union with a single currency might be
more resistant to economic and monetary crises.
Although the conversion rate between the basket
unit (ECU) and the new currency was fixed at one to one (1 ECU = 1
euro), the Madrid European Council in December 1995 decided that the
future single currency should be called the "euro". Several reasons
were put forward for this: the fact that the definition of the unit
changed (from an indirectly calculated basket unit of currencies to
a unit defined by supply and demand on the exchange markets), the
psychological barrier of the depreciation of the ECU basket unit ,
in particular among the public in those countries whose currency was
constantly being revalued against the ECU (especially the Deutsche
Mark), the fact that ECU was an abbreviation for "European Currency
Unit", which could be interpreted as a common European accounting
unit and not as a currency in its own right, or the greater variety
in the pronunciation of ECU than of EURO in the different
of EMU and the Euro (1999)
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