The European Economic Community (EC) was established by the Trety of Rome in 1957 with the intent of reaching full economic, monetary, and political union among its member countries. The primary goal of this European Community was to operate as a single market. In the beggining the European Community was consited of France, Germany, Italy, Belgium, Netherland and Luxembourg. Those countries were the first, because they had open economies. Nowadays, the members of the European Community are 15 countries.
Iin order for a common market to be established, the need of a common currency was essential. By that the transaction cost would be eliminated and the uncertainty of the exchange rates. So, in order for aal those to be accomplished, the European had to create a monetary system, which called, EMS (European Monetary System).
The EMS was created in order for the countries of EC to achieve financial cooperation and monetary stability.
The EMS was created in March 1979 as an answer to the instability of the European economies, caused by flunctuations in the exchange rates. Its purpose was: 1) to establish monetary stability, 2) to overcome constraints caused by the interdependence of EU economies and 3) to aid the long-term process of European monetary integration. The mechanism the will help the success of the EMS was the Exchange Rate Mechanism (ERM), a voluntary system of semi-fixed exchange rates, based on ECU.
The ERM is a key instrument in order to achieve a single European currency administered by an EU central bank, which was the aim of the EMS
and and of the Treaty of Maastricht in 1992. So, the countries in that Treaty set a date in order to achieve these goals. The date was the January 1, 1999, but because the process of achieving this union is very...