The European Union (EU) is a family of democratic European countries working together to improve life for their citizens and to build a better world. In just half a century it has delivered peace and prosperity in Europe, a single currency and a frontier-free 'single market' where people, goods, services and capital can move around freely. It has become a major trading bloc, and a world leader in fields such as environmental protection and development aid. The European Union's success owes much to the unusual way in which it works. Unusual because the EU is not a federation like the United States; nor is it simply an organisation for cooperation between governments, like the United Nations. It is, in fact, unique. The countries that make up the EU remain independent sovereign nations but they pool their sovereignty in order to gain a strength and world influence none of them could have alone. Pooling sovereignty means, in practice, that the member states delegate some of their decision-making powers to shared European institutions they have created, so that decisions on specific matters of joint interest can be made democratically at European level. Europe's three main decision making institutions are: The European Parliament (EP), which represents the EU's citizens and is directly elected by them; The Council of the European Union, which represents the individual member states; The European Commission, which seeks to uphold the interests of the Union as a whole. The 'institutions', working together as a whole, create the policies and laws that apply throughout the EU. In principle, it is the Commission that proposes new European laws, but it is the Parliament and the Council that enact them. It is the responsibility of the European Court of Justice to uphold the rule of European law, and the Court of Auditors to check the financing of the Union's activities.
Objectives of European Union
The framework for cooperation on economic policy is economic and monetary union (EMU). All EU countries are part of EMU. It is the context within which they set guidelines for economic and social policy. These guidelines ensure that national policies are mutually reinforcing, rather than pulling in different directions. The overall result is more growth, more jobs and a higher level of social welfare for all.
The benefits of the euro (€)
The euro is used daily by more than 60% of the EU’s citizens. Several other EU countries are actively preparing to join them. Euro area member countries benefit from an internationally recognised currency with high credibility with investors. Their citizens and businesses also benefit: the cost of changing money when travelling or doing business within the euro area has disappeared; the cost of making cross-border payments has in most cases either disappeared or come down significantly; consumers and businesses can compare prices more readily – which stimulates competition.
Being in the euro area is a guarantee of price stability. Euro area countries have handed responsibility for setting key interest rates to the European Central Bank (ECB). It sets these at levels designed to keep euro area inflation below 2% in the medium-term. The ECB can also intervene in foreign exchange markets to influence the exchange rate of the euro, and it manages the EU’s foreign exchange reserves.
Five non-euro countries are part of a system known as ERM II. This is the second-generation Exchange Rate Mechanism. It limits a country’s currency to narrow fluctuation margins with the euro. This gives its currency a stable exchange rate with that of its major trading partners. Five countries are members of ERM II: Denmark, Estonia, Latvia, Lithuania and Slovakia. For countries wanting to adopt the euro, membership of ERM II is part of their preparation, since two years of prior exchange rate stability is one of five euro entry tests. The others relate to interest...