In June 1988 the European Council confirmed the objective of the progressive realization of Economic and Monetary Union (EMU). It mandated a committee chaired by Jacques Delors, the then President of the European Commission, to study and propose concrete stages leading to this union.
Economic and monetary union evolved in three discrete but evolutionary steps. First step - On the basis of the Delors Report, the European Council decided in June 1989 that the first stage of the realisation of economic and monetary union should begin on 1 July 1990. On this date, in principle, all restrictions on the movement of capital between Member States were abolished. The Committee of Governors of the central banks of the Member States of the European Economic Community, which had played an increasingly important role in monetary cooperation since its creation in May 1964, was given additional responsibilities. These were laid down in a Council Decision dated 12 March 1990. Their new tasks included holding consultations on, and promoting the coordination of, the monetary policies of the Member States, with the aim of achieving price stability. In view of the relatively short time available and the complexity of the tasks involved, the preparatory work for Stage Three of Economic and Monetary Union (EMU) was also initiated by the Committee of Governors. The first step was to identify all the issues which should be examined at an early stage, to establish a work programme by the end of 1993 and to define accordingly the mandates of the existing sub-committees and working groups established for that purpose. For the realization of Stages Two and Three, it was necessary to revise the Treaty establishing the European Economic Community (the Treaty of Rome) in order to establish the required institutional structure. To this end, an Intergovernmental Conference on EMU was convened, which was held in 1991 in parallel with the Intergovernmental Conference on political union. The negotiations resulted in the Treaty on European Union which was agreed in December 1991 and signed in Maastricht on 7 February 1992. However, owing to delays in the ratification process, the Treaty (which amended the Treaty establishing the European Economic Community changing its name to the Treaty establishing the European Community and introduced, inter alia, the Protocol on the Statute of the European System of Central Banks and of the European Central Bank and the Protocol on the Statute of the European Monetary Institute) did not come into force until 1 November 1993. The first stage in the process began on 1 July 1990 with the liberalization of capital movements. Second step - The establishment of the European Monetary Institute (EMI) on 1 January 1994 marked the start of the second stage of EMU and with this the Committee of Governors ceased to exist. The EMI's transitory existence also mirrored the state of monetary integration within the Community. The EMI had no responsibility for the conduct of monetary policy in the European Union this remained the preserve of the national authorities nor had it any competence for carrying out foreign exchange intervention. The two main tasks of the EMI:
strengthening cooperation between the national central banks and the coordination of Member States' monetary policies (during this stage, monetary policy remains in the hands of the national authorities);
carrying out the necessary preparatory work for establishment of the European System of Central Banks (ESCB), which is to conduct the single monetary policy from the beginning of the third stage, and for introduction of the single currency. To this end, the EMI provided a forum for consultation and for an exchange of views and information on policy issues and it specified the regulatory, organisational and logistical framework necessary for the ESCB to perform its tasks in Stage Three. In December 1995 the European Council agreed...
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