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Notes for a Discussion on the European Single Currency

Published online by Cambridge University Press:  10 June 2011

A.D. Wilkie
Affiliation:
Dennington, Ridgeway, Horsell, Woking, Surrey, GU21 4QR, U.K. Tel: +44 (0)1483 725984; Fax: +44 (0)1483 725984; E-mail: davidwilkie@inqa.com
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Abstract

This paper forms notes for discussions about the European single currency at the Institute of Actuaries and the Faculty of Actuaries. The author assumes (and hopes) that the single currency will start on time in 1999, with most of the Member States of the European Union included. The key dates are 1 January 1999, when the exchange rates between currencies will become irrevocably locked and become conversion rates, and 2002, when euro notes and coins will be introduced, and the retail banking sector will convert to euros. The advantages of a single currency are potentially very great; the costs are also considerable. Governments of Member States will no longer be able to get a competitive advantage by devaluing their currency, or be able to choose an inflation rate that is different from that of the E.U. as a whole. The key document is the Maastricht Treaty, and the conversion criteria included therein are discussed. The author concludes that, if governments choose to interpret the criteria leniently, all countries, except possibly Greece, will be included in 1999, with Greece joining a year or two later. Some of the practical considerations for actuaries, including life insurance, general insurance, pensions, banking and investment are mentioned. The paper is not comprehensive, and is a personal contribution to stimulate discussion.

Type
Sessional meetings: papers and abstracts of discussions
Copyright
Copyright © Institute and Faculty of Actuaries 1997

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References

Bank of England (1996). Practical issues arising from the introduction of the euro. Issue 1 (May 1996) and Issue 2 (September 1996).Google Scholar
European Commission (May 1995). One currency for Europe. Green Paper on the practical arrangements for the introduction of the single currency.Google Scholar
European Monetary Institute (November 1995). Progress towards convergence.Google Scholar
European Monetary Institute (November 1995). The changeover to the single currency.Google Scholar
Expert Group on the Changeover to the Single Currency (Chairman Drs. ing. Cees Maas) (January 1995). The preparation of the changeover to the single European currency. (Interim report).Google Scholar
Expert Group on the Changeover to the Single Currency (Chairman Drs. ing. Cees Maas) (May 1995). Progress report on the preparation of the changeover to the single European currency.Google Scholar
Taussig, F.W. (1911). Principles of economics, two volumes. The Macmillan Company, New York.Google Scholar
Treaty on European Union, including the Protocols and Final Act with Declarations (1992) Maastricht, 7 February 1992. HMSO.Google Scholar

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