Unit IV

ECONOMIC AND MONETARY UNION (EMU)

In June 1988 the European Council confirmed the objective of the progressive realisation 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.
The resulting Delors Report proposed that economic and monetary union should be achieved in three discrete but evolutionary steps.

Stage One of EMU

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. 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.
For the realisation 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.
The negotiations resulted in the Treaty on European Union which was agreed in December 1991 and signed in Maastricht on 7 February 1992. The Treaty introduced the Protocol on the Statute of the European System of Central Banks and of the European Central Bank.