1.

http://www.helium.com/items/792357the-amero-should-the-us-support-anorth-american-wide-currency-likethe-euro

The Amero: Should the US support a

North American-wide currency like the
Euro?
Results so far:
No
Yes

75% 218 votes

Total: 291 votes
25% 73 votes

There would be very little point in a North American-wide currency, for a variety of
reasons.
The North American Free Trade Agreement (NAFTA) comprises of the three major
countries - the USA, Canada and Mexico. This is similar to the EU in that there is an
agreement between the countries to engage in free trade, as it is generally thought to be
beneficial to trade along the lines of comparative advantage (i.e. buy from the country
with the lowest cost) and this can only occur with free trade. However, the EU comprises
of 27 countries at the time of writing, 13 of which use the Euro as their currency.
The premise behind this is twofold - firstly a common currency creates certainty in the
business world, as fluctuations in exchange rates will no longer affect import and export
spending and revenues. The Euro was also introduced with the aim of becoming a "hard
currency" on the global stage, allowing better terms of trade for the countries using it, and
again greater stability in their economies. Countries such as Italy and Spain that
previously had very weak currencies benefited greatly from the Euro as a result.
One of the most important parts of Euro membership however is fitting with the
"convergence criteria" - in other words, if countries' economies do not have similar rates
of inflation and are not in a similar position in the economic cycle, they cannot be

allowed to join. This is because monetary policy for the Euro has to be controlled
centrally or the currency would have different values in different countries, but as a result
countries will have no control over their own bank base rate. Thus, if your country is
experiencing serious inflation while all others are having no problems, monetary policy
cannot come to your country's aid, and inflation could become uncontrollable, especially
when countries' fiscal policy is also tied down so harshly.
Now, a North American-wide currency would not cover 3 countries, it would cover 23,
most of which are small Caribbean island nations whose economies are nothing like those
of the USA, Mexico or Canada. Firstly there is little point in introducing a common
currency across these countries as the amount of trade they partake in with the US is
likely to be negligible, but more importantly, there is no convergence between the
economies. A common currency, although beneficial to some, would almost certainly be
disastrous for others.
Instead it could be possible to adopt a common currency across NAFTA. Although
convergence is possible and the volumes of trade between the countries is presumably
quite large, the cost of switching over, although singular would be large. The benefits on
the other hand, would be small. Whilst the Euro is already in 13 countries and likely to be
adopted in more soon, the "Amero" would be unlikely to be adopted in more than 3
countries, and the benefits of stability would be on too small a scale.
Furthermore, the US dollar (although currently overvalued) and the Canadian dollar are
both strong currencies. Scrapping them both for something that could easily go wrong if
not carefully controlled would be incredibly foolhardy.
Therefore I would suggest that although the "Amero" might have limited benefits, there is
really very little point in introducing it, which would be a risky business indeed,
sacrificing participants' sovereignty over their monetary policy, which is not something to
be given up lightly.

2.

http://www.imf.org/external/pubs/nft/2005/EURO/ENG/euroadop.pdf

Euro adoption in Central and Eastern Europe

3.

http://www-ceel.economia.unitn.it/corsomittone/tamborini/pa.pdf

Again on the strong euro

4.

http://eur-lex.europa.eu/Notice.do?
mode=dbl&lang=en&ihmlang=en&lng1=en,ro&lng2=bg,cs,da,de,el,en,es,et,fi,fr
,hu,it,lt,lv,mt,nl,pl,pt,ro,sk,sl,sv,&val=262006:cs&page=

en

ro

Regulation (EC) No 2560/2001 of the

European Parliament and of the Council
of 19 December 2001

Regulamentul (CE) nr. 2560/2001 al

Parlamentului European i al Consiliului
din 19 decembrie 2001

on cross-border payments in euro

privind plile transfrontaliere n euro

THE EUROPEAN PARLIAMENT AND THE

COUNCIL OF THE EUROPEAN UNION,

PARLAMENTUL EUROPEAN I CONSILIUL

UNIUNII EUROPENE,
avnd n vedere Tratatul de instituire a
Comunitii Europene, n special articolul
95 alineatul (1),
avnd n vedere propunerea Comisiei [1],

Having regard to the Treaty establishing

the European Community, and in
particular Article 95(1) thereof,
Having regard to the proposal from the
Commission(1),
Having regard to the opinion of the
Economic and Social Committee(2),
Having regard to the opinion of the
European Central Bank(3),
Acting in accordance with the procedure
laid down in Article 251 of the Treaty(4),
Whereas:

avnd n vedere avizul Comitetului

Economic i Social [2],
avnd n vedere avizul Bncii Centrale
Europene [3],
hotrnd n conformitate cu procedura
prevzut la articolul 251 din tratat [4],
ntruct:

(1) Directiva 97/5/CE a Parlamentului

European i a Consiliului din 27 ianuarie
1997 privind transferurile transfrontaliere
de fonduri [5] a urmrit mbuntirea
serviciilor de transfer transfrontalier de
fonduri i ndeosebi a eficienei acestora.
Obiectivul a fost s se permit, n special
consumatorilor i ntreprinderilor mici i
mijlocii, efectuarea de transferuri rapide,
sigure i ieftine dintr-o parte a Comunitii
n alta. Transferurile i plile
transfrontaliere n general sunt nc
extrem de scumpe n comparaie cu plile
la nivel naional. Din constatrile unui
studiu ntreprins de Comisie i difuzat la
20 septembrie 2001 se observ
insuficienta informare a consumatorilor
sau chiar lipsa de informare a acestora cu
privire la costul transferurilor, iar costul
mediu al transferurilor transfrontaliere de
fonduri s-a schimbat nesemnificativ din
1993, cnd s-a ntreprins un studiu
asemntor.
(1) Directive 97/5/EC of the European
(2) Comunicarea Comisiei ctre
Parliament and of the Council of 27
Parlamentul European i Consiliu din 31
January 1997 on cross-border credit
ianuarie 2000 privind plile cu amnuntul
transfers(5) sought to improve crosspe piaa intern, mpreun cu Rezoluiile
border credit transfer services and notably Parlamentului European din 26 octombrie
their efficiency. The aim was to enable in 2000 privind Comunicarea Comisiei i din
particular consumers and small and
4 iulie 2001 privind mijloacele de asisten
medium-sized enterprises to make credit acordat agenilor economici n trecerea la

transfers rapidly, reliably and cheaply

moneda euro i rapoartele Bncii Centrale
from one part of the Community to
Europene din septembrie 1999 i din
another. Such credit transfers and cross- septembrie 2000 privind mbuntirea
border payments in general are still
serviciilor de transferuri transfrontaliere
extremely expensive compared to
au subliniat fiecare necesitatea imperativ
payments at national level. It emerges
de a aduce mbuntiri efective n acest
from the findings of a study undertaken by domeniu.
the Commission and released on 20
September 2001 that consumers are
given insufficient or no information on the
cost of transfers, and that the average
cost of cross-border credit transfers has
hardly changed since 1993 when a
comparable study was carried out.
(2) The Commission's Communication to (3) Comunicarea Comisiei ctre
the European Parliament and the Council Parlamentul European, Consiliu, Comitetul
of 31 January 2000 on Retail Payments in Economic i Social, Comitetul Regiunilor i
the Internal Market, together with the
Banca Central European din 3 aprilie
European Parliament Resolutions of 26
2001 privind pregtirile pentru
October 2000 on the Commission
introducerea bancnotelor i monedelor
Communication and of 4 July 2001 on
euro a anunat c se va avea n vedere de
means to assist economic actors in
ctre Comisie utilizarea tuturor mijloacelor
switching to the euro, and the reports of pe care le are la dispoziie i adoptarea
the European Central Bank of September msurilor necesare pentru a asigura
1999 and September 2000 on improving apropierea ct mai mare a costului
cross-border payment services have each tranzaciilor transfrontaliere de costul
underlined the urgent need for effective
tranzaciilor naionale, fcnd astfel
improvements in this field.
conceptul de zon euro ca "zon interioar
de pli" tangibil i transparent pentru
cetenii Europei.
(3) The Commission's Communication to (4) n comparaie cu obiectivul care a fost
the European Parliament, the Council, the reafirmat la introducerea monedei euro
Economic and Social Committee, the
scriptice, i anume de a obine o structur
Committee of the Regions and the
de tarife dac nu unitar, cel puin
European Central Bank of 3 April 2001 on similar pentru euro, nu s-au nregistrat
the preparations for the introduction of
rezultate semnificative n privina reducerii
euro notes and coins announced that the costului plilor transfrontaliere n
Commission would consider using all the comparaie cu plile interne.
instruments at its disposal and would take
all the steps necessary to ensure that the
costs of cross-border transactions were
brought more closely into line with the
costs of domestic transactions, thus
making the concept of the euro zone as a
"domestic payment area" tangible and
transparently clear to citizens.
(4) Compared with the objective that was (5) Volumul plilor transfrontaliere crete
reaffirmed when euro book money was
tot mai mult, pe msur ce se finalizeaz
introduced, namely to achieve an, if not
piaa intern. n acest spaiu fr frontiere,
uniform, at least similar charge structure plile au fost facilitate i mai mult prin
for the euro, there have been no
introducerea monedei euro.
significant results in terms of reducing the
cost of cross-border payments compared
to internal payments.
(5) The volume of cross-border payments (6) Faptul c nivelul tarifelor la plile
is growing steadily as completion of the
transfrontaliere continu s rmn mai
internal market takes place. In this area
ridicat dect nivelul tarifelor la plile

without borders, payments have been

further facilitated by the introduction of
the euro.

interne constituie un obstacol n calea

comerului transfrontalier i, prin urmare,
mpiedic funcionarea corect a pieei
interne. Acest lucru poate, de asemenea,
s afecteze ncrederea n euro. Aadar, n
vederea facilitrii funcionrii pieei
interne, este necesar s se asigure c
tarifele la plile transfrontaliere n euro
sunt aceleai cu tarifele la pli efectuate
n euro n interiorul unui stat membru, fapt
care va consolida, la rndul su,
ncrederea n euro.
(7) La operaiile transfrontaliere de pli
electronice n euro, principiul tarifelor
egale ar trebui s se aplice, innd seama
de perioadele de ajustare i de volumul de
lucru suplimentar al instituiilor determinat
de trecerea la moneda euro, de la 1 iulie
2002. Pentru a permite realizarea
infrastructurii i a condiiilor necesare, ar
trebui s se prevad o perioad de
tranziie la transferurile transfrontaliere,
pn la 1 iulie 2003.

(6) The fact that the level of charges for

cross-border payments continues to
remain higher than the level of charges
for internal payments is hampering crossborder trade and therefore constitutes an
obstacle to the proper functioning of the
internal market. This is also likely to affect
confidence in the euro. Therefore, in order
to facilitate the functioning of the internal
market, it is necessary to ensure that
charges for cross-border payments in euro
are the same as charges for payments
made in euro within a Member State,
which will also bolster confidence in the
euro.
(7) For cross-border electronic payment
(8) n etapa actual, nu este
transactions in euro, the principle of equal recomandabil aplicarea principiului
charges should apply, taking account of
tarifelor unitare la cecurile pe suport de
the adjustment periods and the
hrtie, deoarece, prin natura lor, acestea
institutions' extra workload relating to the nu pot fi procesate la fel de eficient ca i
transition to the euro, as from 1 July 2002. celelalte mijloace de plat, n special
In order to allow the implementation of
plile electronice. Totui, principiul
the necessary infrastructure and
tarifelor transparente ar trebui s fie
conditions, a transitional period for cross- aplicat i cecurilor.
border credit transfers should apply until 1
July 2003.
(8) At present, it is not advisable to apply (9) Pentru a permite clientului s evalueze
the principle of uniform charges for paper costul unui transfer transfrontalier, acesta
cheques as by nature they cannot be
trebuie s fie informat cu privire la tarifele
processed as efficiently as the other
practicate i la orice modificare a
means of payment, in particular electronic acestora. Acelai lucru este valabil i n
payments. However, the principle of
cazul n care n plata transfrontalier n
transparent charges should also apply to euro este implicat o alt moned dect
cheques.
euro.
(9) In order to allow a customer to assess (10) Prezentul regulament nu afecteaz
the cost of a cross-border payment, it is
posibilitatea instituiilor de a stabili un tarif
necessary that he be informed of the
global care s acopere diferitele servicii de
charges applied and any modification to
pli, cu condiia s nu existe discriminri
them. The same holds for the case that a ntre plile transfrontaliere i plile
currency other than the euro is involved in naionale.
the cross-border euro-payment
transaction.
(10) This Regulation does not affect the
(11) De asemenea, este important s se
possibility for institutions to offer an allprevad mbuntiri n facilitarea
inclusive fee for different payment
execuiei plilor transfrontaliere de ctre

services, provided that this does not

discriminate between cross-border and
national payments.

instituiile de pli. n acest sens, trebuie

promovat standardizarea, n special n
privina utilizrii Numrului Internaional
de Cont Bancar (IBAN) [6] i a Codului de
Identificare a Bncii (BIC) [7], necesare n
vederea procesrii automate a
transferurilor transfrontaliere. Se
consider esenial utilizarea ct mai
rspndit a acestor coduri. De
asemenea, ar trebui eliminate alte msuri
care determin costuri suplimentare,
pentru a reduce tarifele percepute de la
clieni pentru plile transfrontaliere.
(12) Pentru a uura sarcina instituiilor
care execut plile transfrontaliere, este
necesar eliminarea treptat a obligaiilor
privind declaraiile naionale periodice
pentru statisticile privind balanele de
pli.

(11) It is also important to provide for

improvements to facilitate the execution
of cross-border payments by payment
institutions. In this respect,
standardisation should be promoted as
regards, in particular, the use of the
International Bank Account Number (IBAN)
(6) and the Bank Identifier Code (BIC)(7)
necessary for automated processing of
cross-border credit transfers. The widest
use of these codes is considered to be
essential. In addition, other measures
which entail extra costs should be
removed in order to lower the charges to
customers for cross-border payments.
(12) To lighten the burden on institutions (13) Pentru a asigura respectarea
that carry out cross-border payments, it is prezentului regulament, statele membre
necessary to gradually remove the
ar trebui s se asigure c exist proceduri
obligations concerning regular national
adecvate i eficiente de contestaie sau de
declarations for the purposes of balance- atac n vederea rezolvrii eventualelor
of-payments statistics.
dispute dintre emitentul ordinului de plat
i instituie sau dintre beneficiarul
acestuia i instituia sa utilizndu-se, dac
este posibil, procedurile existente.
(13) In order to ensure that this Regulation (14) Este de dorit ca, pn la 1 iulie 2004,
is observed, the Member States should
Comisia s prezinte un raport privind
ensure that there are adequate and
aplicarea prezentului regulament.
effective procedures for lodging
complaints or appeals for settling any
disputes between the originator and his
institution or between the beneficiary and
his institution, where applicable using
existing procedures.
(14) It is desirable that not later than 1
(15) Ar trebui s se prevad o procedur
July 2004 the Commission should present care s permit aplicarea prezentului
a report on the application of this
regulament i n cazul plilor
Regulation.
transfrontaliere executate n moneda altui
stat membru, la decizia acestuia din urm,
(15) Provision should be made for a
ADOPT PREZENTUL REGULAMENT:
procedure whereby this Regulation can
also be applied to cross-border payments
made in a currency of another Member
State where that Member State so
decides,

HAVE ADOPTED THIS REGULATION:

Articolul 1
Obiectul i domeniul de aplicare

Article 1

Subject matter and scope

Prezentul regulament prevede

reglementri privind plile
transfrontaliere n euro, pentru a asigura
faptul c tarifele aferente acestor pli
sunt aceleai cu tarifele pentru plile n
euro din interiorul unui stat membru.
Acesta se aplic plilor transfrontaliere n
euro n sum de maxim 50000 EUR, n
interiorul Comunitii.
Prezentul regulament nu se aplic plilor
transfrontaliere efectuate ntre instituii, n
cont propriu.

This Regulation lays down rules on crossborder payments in euro in order to

ensure that charges for those payments
are the same as those for payments in
euro within a Member State.
It shall apply to cross-border payments in Articolul 2
euro up to EUR 50000 within the
Community.
This Regulation shall not apply to crossDefiniii
border payments made between
institutions for their own account.
n sensul prezentului regulament, se aplic
urmtoarele definiii:
Article 2
(a) "pli transfrontaliere" nseamn:
Definitions

(i) "transferuri transfrontaliere", adic

tranzaciile efectuate la iniiativa unui
emitent printr-o instituie sau prin
sucursala acesteia dintr-un stat membru,
n vederea punerii unei sume de bani la
dispoziia unui beneficiar, la o instituie
sau la sucursala acesteia dintr-un alt stat
membru; emitentul i beneficiarul pot fi
una i aceeai persoan;
For the purposes of this Regulation, the
(ii) "tranzacii transfrontaliere de plat
following definitions shall apply:
electronic", adic:
(a) "cross-border payments" means:
- transferuri transfrontaliere de fonduri,
efectuate prin intermediul unui instrument
de plat electronic, altul dect cele
dispuse i executate de instituii;
(i) "cross-border credit transfers" being
- retrageri transfrontaliere de numerar prin
transactions carried out on the initiative of intermediul unui instrument de plat
an originator via an institution or its
electronic i ncrcarea (i descrcarea)
branch in one Member State, with a view unui instrument de bani electronici n
to making an amount of money available dispozitive distribuitoare de bani i
to a beneficiary at an institution or its
bancomate, situate n sediile emitentului
branch in another Member State; the
sau ale unei instituii abilitate prin
originator and the beneficiary may be one contract s accepte instrumentul de plat;
and the same person,
(ii) "cross-border electronic payment
(iii) "cecuri transfrontaliere" nseamn
transactions" being:
cecurile pe suport de hrtie, definite n
Convenia de la Geneva din 19 martie
1931, care stabilete legi unitare cu privire
la cecuri, trase asupra unei instituii
situate n interiorul Comunitii i utilizate
pentru operaii transfrontaliere n

interiorul Comunitii;
- the cross-border transfers of funds
effected by means of an electronic
payment instrument, other than those
ordered and executed by institutions,

(b) "instrument de plat electronic"

nseamn un instrument de plat la
distan i un instrument de bani
electronici, care permite posesorului s
efectueze una sau mai multe operaii de
plat electronic;
- cross-border cash withdrawals by means (c) "instrument de plat la distan"
of an electronic payment instrument and nseamn un instrument care permite
the loading (and unloading) of an
posesorului accesul la fondurile deinute n
electronic money instrument at cash
contul su la o instituie, prin care plata
dispensing machines and automated teller poate fi efectuat ctre un beneficiar i
machines at the premises of the issuer or care necesit, n mod normal, un cod
an institution under contract to accept the personal de identificare i o alt dovad
payment instrument,
similar a identitii. Instrumentul de plat
la distan include n special carduri de
pli (fie c este vorba de carduri de
credit, de debit, de debit amnat sau de
carduri rencrcabile) i carduri care
permit efectuarea de operaiuni bancare
telefonic sau de la domiciliu. Aceast
definiie nu include transferurile
transfrontaliere de fonduri;
(iii) "cross-border cheques" being those
(d) "instrument de bani electronici"
paper cheques defined in the Geneva
nseamn un instrument de plat
Convention providing uniform laws for
rencrcabil, fie un card cu valoare
cheques of 19 March 1931 drawn on an
stocat, fie memoria unui calculator, pe
institution located within the Community care sunt stocate electronic uniti
and used for cross-border transactions
valorice;
within the Community;
(b) "electronic payment instrument"
(e) "instituie" nseamn orice persoan,
means a remote access payment
fizic sau juridic, care execut pli
instrument and electronic money
transfrontaliere ca parte a activitii sale;
instrument that enables its holder to
effect one or more electronic payment
transactions;
(c) "remote access payment instrument" (f) "taxe percepute" nseamn orice tax
means an instrument enabling a holder to perceput de o instituie i care este
access funds held on his/her account at an legat n mod direct de o plat
institution, whereby payment may be
transfrontalier n euro.
made to a payee and normally requires a
personal identification code and/or any
other similar proof of identity. The remote
access payment instrument includes in
particular payment cards (whether credit,
debit, deferred debit or charge cards) and
cards having phone- and home-banking
applications. This definition does not
include cross-border credit transfers;
(d) "electronic money instrument" means Articolul 3
a reloadable payment instrument,
whether a stored-value card or a
computer memory, on which value units
are stored electronically;
(e) "institution" means any natural or legal Taxe pentru operaii transfrontaliere de
person which, by way of business,
plat electronic i transferuri
executes cross-border payments;
transfrontaliere

(f) "charges levied" means any charge

levied by an institution and directly linked
to a cross-border payment transaction in
euro.

Article 3
Charges for cross-border electronic
payment transactions and credit transfers
1. With effect from 1 July 2002, charges
levied by an institution in respect of crossborder electronic payment transactions in
euro up to EUR 12500 shall be the same
as the charges levied by the same
institution in respect of corresponding
payments in euro transacted within the
Member State in which the establishment
of that institution executing the crossborder electronic payment transaction is
located.
2. With effect from 1 July 2003 at the
latest, charges levied by an institution in
respect of cross-border credit transfers in
euro up to EUR 12500 shall be the same
as the charges levied by the same
institution in respect of corresponding
credit transfers in euro transacted within
the Member State in which the
establishment of that institution executing
the cross-border transfer is located.
3. With effect from 1 January 2006 the
amount EUR 12500 shall be raised to EUR
50000.

Article 4

(1) ncepnd cu data de 1 iulie 2002,

taxele percepute de o instituie pentru
operaii transfrontaliere de plat
electronic n euro n valoare maxim de
12500 EUR sunt identice taxelor percepute
de aceeai instituie pentru pli
corespondente n euro efectuate n
interiorul statului membru n care este
situat unitatea instituiei care execut
plata electronic transfrontalier.
(2) ncepnd cu data de 1 iulie 2003,
taxele percepute de o instituie pentru
transferuri transfrontaliere n euro n
valoare maxim de 12500 EUR sunt
identice taxelor percepute de aceeai
instituie pentru transferuri corespondente
n euro efectuate n interiorul statului
membru n care este situat unitatea
instituiei care execut transferul
transfrontalier.
(3) ncepnd cu data de 1 ianuarie 2006,
suma de 12500 EUR se ridic la 50000
EUR.
Articolul 4
Transparena taxelor

(1) Fiecare instituie pune la dispoziia

clienilor si, ntr-o form uor de neles,
n scris i, dup caz, n conformitate cu
normele de drept intern, prin mijloace
electronice, informaii prealabile privind
taxele percepute pentru pli
transfrontaliere i pentru pli efectuate n
interiorul statului membru n care este
situat instituia.
Statele membre pot prevedea obligaia de
a face s figureze pe carnetele de cecuri o
observaie care s avertizeze consumatorii
asupra taxelor aferente utilizrii
transfrontaliere a cecurilor.
(2) Orice modificare a taxelor este
comunicat, n modul indicat la alineatul
(1), naintea datei la care aceasta devine
efectiv.
(3) n cazul n care instituiile percep taxe
pentru efectuarea schimbului valutar din i

n euro, acestea trebuie s pun la

dispoziia clienilor:
Transparency of charges
(a) informaii prealabile privind toate
taxele de schimb pe care intenioneaz s
le perceap i
1. An institution shall make available to its (b) informaii specifice privind diferitele
customers in a readily comprehensible
taxe de schimb care au fost percepute.
form, in writing, including, where
appropriate, in accordance with national
rules, by electronic means, prior
information on the charges levied for
cross-border payments and for payments
effected within the Member State in which
its establishment is located.
Member States may stipulate that a
Articolul 5
statement warning consumers of the
charges relating to the cross-border use of
cheques must appear on cheque books.
2. Any modification of the charges shall be Msuri pentru facilitarea transferurilor
communicated in the same way as
transfrontaliere
indicated in paragraph 1 in advance of the
date of application.
3. Where institutions levy charges for
(1) Instituiile comunic fiecrui client,
exchanging currencies into and from euro, dup caz, la cerere, Numrul Internaional
institutions shall provide their customers de Cont Bancar (IBAN) al acestuia, precum
with:
i Codul de Identificare a Bncii (BIC)
aferent instituiei.
(a) prior information on all the exchange (2) La cerere, clientul comunic instituiei
charges which they propose to apply; and care execut transferul numrul IBAN al
beneficiarului i codul BIC al instituiei
beneficiarului. n cazul n care clientul nu
comunic aceste informaii, instituia
poate percepe acestuia taxe suplimentare.
n acest caz, instituia trebuie s pun la
dispoziia clienilor informaii privind
taxele suplimentare, n conformitate cu
articolul 4.
(b) specific information on the various
(3) ncepnd cu 1 iulie 2003, instituiile
exchange charges which have been
indic pe extrasul de cont al fiecrui client
applied.
sau n anexa la acesta numrul IBAN al
acestuia i codul BIC al instituiei.
(4) Pentru toate facturrile transfrontaliere
de mrfuri i servicii n Comunitate, un
furnizor care accept plata prin transfer
comunic clienilor si numrul su IBAN
i codul BIC al instituiei sale.
Article 5
Articolul 6
Measures for facilitating cross-border
transfers
1. An institution shall, where applicable,
communicate to each customer upon
request his International Bank Account
Number (IBAN) and that institution's Bank
Identifier Code (BIC).
2. The customer shall, upon request,
communicate to the institution carrying

Obligaiile statelor membre

(1) Statele membre elimin de la 1 iulie
2002 toate obligaiile de raportare privind
plile transfrontaliere n sum de pn la
12500 EUR pentru statisticile privind
balanele de pli.
(2) Statele membre elimin de la 1 iulie
2002 toate obligaiile naionale referitoare

out the transfer the IBAN of the

la informaiile minime care trebuie
beneficiary and the BIC of the
furnizate cu privire la beneficiar i care
beneficiary's institution. If the customer
mpiedic automatizarea executrii plii.
does not communicate the above
information, additional charges may be
levied on him by the institution. In this
case, the institution must provide
customers with information on the
additional charges in accordance with
Article 4.
3. With effect from 1 July 2003, institutions Articolul 7
shall indicate on statements of account of
each customer, or in an annex thereto, his
IBAN and the institution's BIC.
4. For all cross-border invoicing of goods Respectarea prezentului regulament
and services in the Community, a supplier
who accepts payment by transfer shall
communicate his IBAN and the BIC of his
institution to his customers.
Respectarea prezentului regulament este
asigurat prin sanciuni eficace,
proporionale i de descurajare.
Article 6
Articolul 8
Obligations of the Member States

Clauza de revizuire

1. Member States shall remove with effect

from 1 July 2002 at the latest any national
reporting obligations for cross-border
payments up to EUR 12500 for balance-ofpayment statistics.
2. Member States shall remove with effect
from 1 July 2002 at the latest any national
obligations as to the minimum information
to be provided concerning the beneficiary
which prevent automation of payment
execution.

Pn la 1 iulie 2004, Comisia prezint

Parlamentului European i Consiliului un
raport privind aplicarea prezentului
regulament, n special cu privire la:

Article 7
Compliance with this Regulation

Compliance with this Regulation shall be

guaranteed by effective, proportionate
and deterrent sanctions.

- modificrile survenite n infrastructurile

sistemului de pli transfrontaliere;

- oportunitatea mbuntirii serviciilor

ctre consumatori prin consolidarea
condiiilor concurenei n prestarea
serviciilor de plat transfrontalier;
- efectele aplicrii prezentului regulament
asupra taxelor percepute pentru pli
efectuate n interiorul unui stat membru;
- oportunitatea creterii sumei prevzute
la articolul 6 alineatul (1) la 50000 EUR de
la 1 ianuarie 2006, lund n considerare
eventualele consecine pentru
ntreprinderi.
Acest raport este nsoit, dup caz, de
propuneri de modificare.
Articolul 9

Article 8

Intrarea n vigoare

Review clause

Prezentul regulament intr n vigoare n a

treia zi de la publicarea n Jurnalul Oficial
al Comunitilor Europene.

Not later than 1 July 2004, the

Commission shall submit to the European
Parliament and to the Council a report on
the application of this Regulation, in
particular on:

Prezentul regulament se aplic i n cazul

plilor transfrontaliere efectuate n
moneda unui alt stat membru, dac
acesta din urm notific Comisiei decizia
sa de a extinde aplicarea regulamentului
la moneda sa. Notificarea este publicat n
Jurnalul Oficial de ctre Comisie.
Extinderea intr n vigoare n a
paisprezecea zi de la publicarea sa.
- changes in cross-border payment system Prezentul regulament este obligatoriu n
infrastructures,
toate elementele sale i se aplic direct n
toate statele membre.
- the advisability of improving consumer
services by strengthening the conditions
of competition in the provision of crossborder payment services,
- the impact of the application of this
Adoptat la Bruxelles, 19 decembrie 2001.
Regulation on charges levied for payments
made within a Member State,
- the advisability of increasing the amount Pentru Parlamentul European
provided for in Article 6(1) to EUR 50000
as from 1 January 2006, taking into
account any consequences for
undertakings.
This report shall be accompanied, where Preedintele
appropriate, by proposals for
amendments.
N. Fontaine
Article 9

Pentru Consiliu

Entry into force

Preedintele

This Regulation shall enter into force on

A. Neyts-Uyttebroeck
the third day following that of its
publication in the Official Journal of the
European Communities.
This Regulation shall also apply to cross- [1] JO C 270 E, 25.9.2001, p. 270.
border payments made in the currency of
another Member State when the latter
notifies the Commission of its decision to
extend the Regulation's application to its
currency. The notification shall be
published in the Official Journal by the
Commission. The extension shall take
effect 14 days after the said publication.
[2] Aviz prezentat la 10 decembrie 2001
(nepublicat nc n Jurnalul Oficial).
This Regulation shall be binding in its
[3] JO C 308, 1.11.2001, p. 17.
entirety and directly applicable in all
Member States.
Done at Brussels, 19 December 2001.
[4] Avizul Parlamentului European din 15
noiembrie 2001 (nepublicat nc n Jurnalul
Oficial), Poziia comun a Consiliului din 7
decembrie 2001 (JO C 363, 19.12.2001, p.
1) i Decizia Parlamentului European din
13 decembrie 2001.
[5] JO L 43, 14.2.1997, p. 25.

For the European Parliament

[6] Standard ISO nr. 13613.

The President

[7] Standard ISO nr. 9362.

N. Fontaine

--------------------------------------------------

For the Council

The President
A. Neyts-Uyttebroeck
(1) OJ C 270 E, 25.9.2001, p. 270.
(2) Opinion delivered on 10 December
2001 (not yet published in the Official
Journal).
(3) OJ C 308, 1.11.2001, p. 17.
(4) Opinion of the European Parliament of
15 November 2001 (not yet published in
the Official Journal), Council Common
Position of 7 December 2001 (OJ C 363,
19.12.2001, p. 1) and Decision of the
European Parliament of 13 December
2001.
(5) OJ L 43, 14.2.1997, p. 25.
(6) ISO Standard No 13613.
(7) ISO Standard No 9362.

5.

http://www.islamic-world.net/economics/islamic_money_against_euro.htm

Islamic Money against the Euro and Dollar

On January 1, 1999, Europe celebrated its momentous event of a single currency for its eleven participating
members that have qualified to join the European Monetary Union according to its Convergence Criteria.
Following this, it is likely that Britain, Sweden, Denmark and Greece that have either opted out or were not
qualified according to the Convergence Criteria at this time, will join by the year 2002. By the year 2002 a
single currency called the Euro will become the commercial medium of market exchange in Europe for the
participating countries.
By establishing a single currency for the exchange of goods and services domestically and internationally,
the Euro will become a determining factor of a unified monetary policy, fiscal policy, exchange rates, interest
rates, and thereby, also of productivity and technological consequences of these economic changes in the
participating countries. Internationally, global capital markets and investment outsourcers will see the rise of
two competing currency mediums, the U.S. Dollar and the Euro. Countries around the world will be holding
their foreign reserves and transacting their tradable in terms of these two currencies. International currencies
will thus become convertible in terms of two competing units.
At such a juncture, the Muslim mind must recount as to what position the Muslim World holds in the midst of
the global division of capital markets between these two competing super-currencies? What would be the
state of her own resource valuation in the global scene? Do the Muslims have an agenda for change? If they
do have an Agenda for change, what are the constructs of that Muslim future?

Until the end of World War II the Western Hemisphere has been engaged in the most heinous kinds of wars
and civil strife within itself. Yet through the Bretton Woods Institutions established in 1944, followed by a
number of economic and monetary unions between the members of the Western Hemisphere, these same
warring nations could rise to a social contract that eliminated wars and political dissensions between them. It
was indeed a civil accord enacted within the institution of democracy that did the work for the Western
Hemisphere.
The Muslim World -- with its teeming millions, vast resources, and above all with the greatest miracle, the
Qur'an, along with the guidance of the Prophet Muhammad, Sunnah, the great Islamic legacy of Shura
(consultation, discourse and interactions), Ijtihad (epistemological inquiry) and Ijma (consensus), all of which
are premised on the exercise of deep Islamic knowledge, tolerance and discourse -- could not realize its
unity. What are then the structural issues according to which Europe could unite and the Muslims could not?
It will be too shallow an answer to this question to differentiate the Western World in respect to its
democracy and the Muslim world as being bereft of democracy. Democracy is a political philosophy that
flourishes on the principles of conflict guiding markets in the form of competition and capitalism that thrives
on the power of corporations and the acquisitive passion for wealth. Politically, democracy thrives on the
back of institutions that muster power and hegemony by majority rule. Any moral value of doing things and of
directing economic resources is subsumed within market consequentialism.
There is no other premise from which democracy derives its rules of conduct than the collective power of
individuals let loose in a world of competing behavior. Such is the nature of individualism that aggregates
itself from the level of individuals to institutions, to governments and to the global capitalist order. On such a
utilitarian world view thrives the Western meaning of democracy.
Now take away from democracy the ultimate supremacy of the individual, the powerful lobby groups and
thus of governments so formed. We will find that democracy and capitalism weaken into dysfunctional
states. With this weakening comes about the collapse of the entire economic, social and political edifice on
which democracy, capitalism and western institutionalism confiscate on others to survive.
Thus the imitation of Western democracy is as self-defeating as is the present days' Muslim political vacuity
in the absence of a well-defined Muslim social contract. On the other hand, the divide between Islam and the
West is based on two polar world views that cannot cross lines for a permanent convergence. Any crossfertilization between the two can only be in terms of mechanical methods that we can share. It can never be
in terms of the core methodology of understanding and conducting life in comprehensive ways. When
Muslim forgot this subtle difference for a long time now they became blind to the many trappings of Western
ways of thinking while being unable to understand this inimical culture, and thereby, being unable to adapt to
it. When rulers and demagogues in the Muslim World imitate the Western designs and prevail over their
citizenry, they try to lock nations into expensive bottlenecks of development, costly technological change,
unequal distribution of power, deprivation of freedom and rights to the masses. Western lobbying is
perpetuated through this machinery of autocratic governance as also by the Muslim World's lethargy and
subservience to the costly technology, de-equalizing market processes and the concomitant governance of
the West genre. To live a day in such inhuman bondage is yet another moment of increased slavery of the
Muslim mind, body and soul to Western masters.
The European Monetary Union on which is premised the Euro was greatly financed by Petro-dollars that
were held as assets by the wealthy Muslim rulers in EMU. By the same token, when the capital surplus Arab
countries bought assets in the International Monetary Fund, they in turn tightened the grips of the IMF over
these assets by securing Arab capital in Western capital markets instead of in the Muslim Countries.
Consequently, the double whamy fell on the Muslim World. On the one hand, the absence of any
expectations for good financial support could not generate the investment climate in the Muslim World. On
the other hand, there was never enough liquidity available to support investments in the Muslim World.
Finally, when global capitalism in its oppressive attire of global governance over markets and institutions
arose from the West, investment capital entered Muslim countries as speculative short-term capital. These
were riddled and driven by interest rate instability and proved to be unsustainable both in terms of projects
and in capital markets.
Thus the alienation of the Muslim World from its own fundamental roots of understanding and doing things
and its enslavement to the alien culture drifted the Muslim World from its solidarity, which could otherwise
have seen the rise of parallels like the Euro and the Dollar in terms of the Islamic Money, Islamic Currency,

Integrated Islamic Capital Markets and a Globally Interlinked Islamic Common Market. Herein, would be
solved the present days problems of economic instability, currency run-off, investment needs, political
subservience, inequity and poverty, all of which plague the Muslim World today. Along with this
reconstruction would arise the political stability and organization for the spread and practice of Islamic
Transformation. Thus, it would arise the Muslim march toward the Ummah as the Islamic globalization
process.
The Islamic globalization process of Ummah as the goal of the Muslim World would look at markets in ways
contrary to the capitalist greed and human deprivation now being unleashed upon the Muslim World. The
irony is abhorring that in the face of exorbitant wealth possessed by a few, wealth that lies in the hands of
and are controlled by Western masters, there continues to be abject deprivation and impoverishment among
the majority of Muslim populations.
Islamic Money would be based on the 100 per cent reserve requirement linking monetary valuation with real
sectoral activities and not with speculation or promissory notes. The productive yield arising from such a real
monetary mobilization would solve the problem of low productivity among factors of production. The
participatory enterprises in the midst of these transformations and real monetary linkages would remove the
relevance of interest rates. Such a system would replace interest transactions with resource mobilization into
participatory enterprises. Consequently, economic efficiency, distributive equity, ownership, property rights
and empowerment would increase across participatory enterprises. Poverty would be eradicated and
alleviated through the force of such participatory entrepreneurial activity and by the direct linkages between
money and real sectoral activity.
This freedom of participatory decision-making and ownership of assets would mean the rise of the Islamic
Social Contract based on the process of Shura (discourse and interaction) which is organized and realized
by the understanding and application of the Precept of Unity of Allah (Tawhid) in all walks of life and thought.
Such a focus will turn away the Muslim global order from the anthropocentric character of conflict,
competition and individualism that grounds democracy as a political philosophy in the West. The reversal will
instead be towards ethical governance of markets and exchange under the enlightened process of learning
by doing by discourse, complementarily and integration as created by Islam.
The Islamic Common Market and the Islamic Capital Market would be a global integration of various regional
Islamic blocs on the basis of the coordinating mechanism of the Islamic Social Contract in terms of the
money-real sectoral linkages, inter-communal trade and institutional guidance of these across the Muslim
World. The effect of this interrelated monetary and real sectoral activity would be the formation of the Islamic
currency revolving around the financial and economic instruments that establish the money-real sectoral
linkage. Thereby, an increase of spending in the Islamically recommended good things of life would create
the environment of abundance in life-fulfilling goods. This in turn would generate income and wealth from
real returns.
The abolition of speculation and its replacement by long-term Islamic investments in diverse Islamic
opportunities, complementary possibilities and technological outlets, in government and consumer spending
across the populous Muslim World, will bring about the much needed stability in markets for financial
instruments and real goods and services. Hence a productivity linked stable exchange rate will emerge from
such a stable market order. The enhancing effects of stable exchange rates and prices will revert to further
resource mobilization, wealth, growth, development and social well-being.
Zakat will arise from the growing wealth of such a dynamic social economy and would be increasingly
channeled into productive outlets for ameliorating the poor and guaranteeing those human resources and
basic needs. Institutions for mobilizing Zakat as an international resource will create microenterprises and
human resource development for poverty alleviation. The great institutions of social well-being based on the
mobilization of Zakat into human development for achieving security, dignity and productive transformation
of the recipients, while always allocating a part of it in current consumption, for the destitute, the sick and the
old, would generate industry and enterprises around such uses of the Zakat Fund. Gross unemployment and
income disparity will thus be eliminated. With social security thus returning to the Muslim nations, social
malaise will also decline. Much will be saved for directing into the higher pursuits of life.
With such momentous changes in the Muslim World towards the Ummah, the Dollar and the Euro will prove
to be weak currencies before the Islamic Money and Islamic Currency, for they will continue to be engulfed
in instability caused by interest rate movements. These will permanently disturb their currency values. The

Dollar and Euro will thus continue to be simply monetary units governed by uncertain interest rate and
exchange rate mechanisms. Monetary policy will remain independent of real sectoral activities. Price
movements will thus be affected by the uncertainties ensuing from the monetary sector. Such an adverse
effect of the monetary sector on the real sector will cause instability in both the real and the financial sectors.
Such instabilities will remain as the great predicament of the Euro and Dollar. The contrary is true of a
competing monetary system and its currency that can deliver a 100 per cent reserve requirement while
interconnecting money with real sector activities. Here then lies the ultimate financial architecture by means
of Islamic Money, Islamic Currency, Islamic Capital Market and Islamic Common Market .These mark the
worldly model of the Ummah. In it the lure for wealth is strategically replaced by the goals of production and
distribution of wealth through the money-real sector linkages. This abolishes interest rates from economic
transactions and premises human well-being on resource mobilization into Islamic possibilities.
Let Muslim around the world, nationally, sub-nationally and collectively take up serious work in this direction
of Islamic Transformation toward the Ummah in the new millennium. Let this invocation remain our
Ramadhan Resolution 1419H for its active emulation into the new Islamic millennium. May Allah help us in
our rightful endeavor
6.

http://english.hotnews.ro/stiri-politics-7082834-imf-chief-recommendedromania-delay-joining-the-euro-zone.htm

IMF chief recommended Romania to delay joining the euro zone

de Dan Popa, transl/adapt. C.B. HotNews.ro
Mari, 30 martie 2010, 15:36 English | Politics

Dominique Strauss Kahn

Foto: AGERPRES
Dominique Strauss Kahn is straightforward in recommending Romania to delay
its intention to join the euro zone. "If you adopted the euro one or even two years
later, it would be for the better. The objective reality is to have good economic
figures to respect the requirements of joining the euro zone and then to realise that
what has been done has been done in haste", IMF chief told Incont.ro. The
economists interviewed by HotNews.ro on the issue agree: instead of joining the
euro zone like the Greeks did, it's better to solve the economy's problems first and
only later to think about it.

"It is not me who needs to decide. The Government needs to do it, but adopting the euro is
not an independent target, it is a target because Romania chose to have a convergence
programme for the euro zone. And adopting the euro should not be just for one year, but
sustainable", Dominique Strauss Kahn explained.
Macroanalitica Managing partner macro-economist Laurian Lungu told HotNews.ro that the
risks of a premature adoption of the euro risks a Greek crisis.
"A forced shift to euro - with an economy which is not ready from a structural point of view inevitably creates the premises of a crisis similar to the Greek, Portuguese or Spanish crisis.
Judging by the way the economic conjuncture looks like, I'd say that Romania needs at least
three to four years to have a macroeconomic stability, necessary for adopting the euro."
"Even if 2014 needs to remain the target for joining the euro zone, the adoption of the euro
needs to happen only when the economic performance is sustainable. From this perspective, a
delay of one or two years would be totally justified", Laurian Lungu believes.
Applied Economics Group economist Liviu Voinea told HotNews.ro that "we can still catch
2015, but I, too, believe, and I have repeatedly said this, the adoption of the euro needs to be
a consequence of a macroeconomic stability and of the structural reforms, not an independent
target. Anyhow, the situation of Greece, but also Spain and Portugal show that the euro zone
has not automatically been the umbrella that some expected."
"I think we should take advantage of the foreign currency and monetary policy independence
as much as we can for the next two years", Liviu Voina claims.
Raiffeisen chief-economist Ionut Dumitru opinionated that "we will probably be never 100%
ready to join the euro. And it is not only about us, but there have been others as well, even
euro zone nucleus states, but I think we should analyse the advantages and disadvantages of
this club's membership. And from this point of view, 2015 is still feasible and seems the best
decision", Dumitru claims.
To his mind, everything is down to how we will join this project and how we will manage to
fulfil the convergence criteria. "It is mainly about the criteria addressing public finance and
inflation, but especially the preparation of the real economy through structural reforms, so
that it copes successfully with the unique currency zone membership.
Aside from that, if we don't have recovered the public finance quickly on healthy grounds
(especially the social side funded by the budget), the target for joining the euro zone will be
pushed further away", Dumitru believes. According to him, an extremely important factor is
the future appetite of the euro zone to welcome new members, after all discussions these days
on the economic and financial situation of some member states.
What does Romania need to join the euro zone?
Theoretically, in order to adopt the euro, Romania needs several "aesthetic surgeries". The
economy should be flexible to shocks, to strong fiscal policies which should allow the
stabilisers' automatic functioning and a low inflation to minimise the dissimilarities with the
European Central Bank's monetary policy.
For example, European Central Bank's researchers that in the case the exchange rate is
associated either with a rather high rate or with a lower economic growth, losing the monetary
policy independence is not going to result in advantages, but costs, The counter-argument is
valid as well.
Usually, in the period ahead of joining the euro zone, there are speculations on the exchange
rate, but this is not the main issue. The serious part seems to be making the economy ready
in the run for joining the euro. And the major aspects are: the fiscal position, the work force

labour market conditions, the financial markets' resistance and strength and the accession
conditions imposed by the EU (the Maastricht criteria).
Romanian Central Bank sources told HotNews.ro that the IMF's chief message actually means
that Romania needs to make the reforms to join ERM II in 2012.
7.

http://www.bis.org/publ/econ2.htm

US monetary aggregates, income velocity and the euro-dollar market

April 1980

Introduction
The basic premise of monetarist doctrine is the proposition, lent support by extensive
empirical research, that the income velocity of money behaves in an essentially stable
way. That is, technically expressed as a "money demand function", the demand for
money has been found in a number of countries to be closely, and principally, related to
changes in interest rates and the level of income. Broadly speaking, rising interest rates,
at short and/or long term, tend to reduce money demand by inducing a shift towards
alternative financial assets, while rising income leads to an increase in the demand for
cash balances for transactions purposes. In the monetarist view, control over the money
stock is therefore seen as the most effective way, making allowance for variable and
sometimes lengthy lags, of controlling final demand and, in particular, the price level.
Moreover, the monetary authorities in various countries, though rather more sceptical of
the stability of money demand, have used estimates of money demand functions,
together with projections of actual and desired levels of final demand, in formulating
policies with respect to money growth.
In the inflationary environment of the 1970s the monetarist approach to economic
stabilisation would appear to have found increasingly wide support. Yet its basic
theoretical premise - the stable demand for- money function - has seemed at times, in
different countries, to rest on shifting sands. Previous demand-for-money relationships
have tended to break down as a result of rapid institutional and technological change
and the growing sophistication of both bank and nonbank market participants in
cushioning themselves against the impact of monetary control provisions or
circumventing such measures. Problems have arisen not only in the choice of
appropriate operating and intermediate target variables but also with regard to the
technical control instruments themselves. At the same time, new questions have been
posed concerning the appropriate definition and identification of monetary aggregates for
purposes of monetary control.
This broad set of issues also has an important international dimension. It is widely
accepted that claims held in the Euro-currency market, to the extent that they are not

already counted in national money supplies, may serve as a substitute for domestic
liquid balances. It is asserted, in particular, that a certain proportion of Euro-currency
assets should, to all intents and purposes, be viewed as the equivalent of domestic
liquidity. The failure to treat it as such statistically (and to exercise some control over it)
may mean that income velocity measured in terms of the domestic aggregates can at
times increase faster than would otherwise be the case. One clear expression of this
view has been given by Governor Wallich of the Federal Reserve Board, who has
estimated that the monetary-type volume of Eurodollar claims which should be added to
the US monetary aggregates amounts to about $50 billion and is growing at the rate of
about 25 per cent, a year. He concludes that
"... if monetary authorities focus exclusively on the growth of domestic
aggregates, ignoring the effects of the more rapid growth of liabilities to
non-banks that is occurring in the Euro-currency market, they may
facilitate more expansionary and more inflationary conditions than they
intend, or may be aware of. Indeed, there is a risk that, over time, as
the Euro-currency market expands relative to domestic markets,
control over the aggregate volume of money may increasingly slip from
the hands of central banks."
These broad issues, domestic and international, pose analytical problems of kinds which
cannot easily be taken into account in the usual demand-for-money analysis. On the
international side, there is no easy answer to the question whether individual countries
should include some portion of Euro-currency claims in their national money supplies
and, if so, to what extent. Moreover, on the domestic side it would appear that factors
relating to competition and equity have, independently of interest rates as such,
significantly influenced the changing pattern of financial intermediation. This would seem
to be true both of changes in the regulatory framework and of the development of new
financial instruments and payments practices. In some countries, particularly the United
States, the banks' recourse to "liabilities management", with a view to minimising the
cost and increasing the availability of funds, is a special case in point.
For these reasons, I have found it helpful, as an alternative to the conventional demandfor-money approach, to use a broader, if less rigorous, income-velocity framework - one
which can be more directly related to changing patterns of financial intermediation. The
paper draws primarily on the experience of the United States, for which comprehensive
data on sectoral flows of funds are available. Among other things, it examines some of
the links between the Euro-dollar market and US domestic monetary conditions.
In terms of its theoretical foundations, the analysis in this paper leans towards those
views which place emphasis on the demand for credit as distinct from the demand for
money. Basically, it sides with the Gurley/Shaw "new view" of financial markets, which
stresses the need for a financial policy designed to enhance credit creation over financial
markets as a whole instead of a monetary policy focusing on the control of specific
banking-sector monetary liabilities. On the banking-sector level, the approach is

consonant with the "European" (and IMF) view of money creation, which underlines the
relative exogeneity of changes on the assets side of the banks' balance sheet: credit to
the private sector, credit to the public sector and net foreign assets. A closely related
view, of course, is the "monetary approach to the balance of payments", which highlights
the role of external flows in equating money-supply creation, as it derives from domestic
credit expansion, to the actual demand for money.
The evidence presented in this paper suggests that since the 1960s, in contrast to
earlier years, changes in the income velocity of M, in the United States can be ascribed
largely to variations in the growth of total domestic credit-market debt in relation to the
money stock. In behavioural terms it would appear historically that the income velocity of
total credit, i.e. the relationship between financial wealth and income, has become
increasingly stable. From the early 1960s onwards the ratio of total credit-market debt to
gross national product fluctuated fairly narrowly around a zero trend, even declining
slightly during later years when the Euro-dollar market was growing very rapidly. With
regard to the domestic expenditure effects of the Eurodollar market, this behaviour
suggests one of two things. On the one hand, viewed independently of US credit-market
developments, it could mean that any marginal influence that increased non-bank
holdings of Euro-dollar claims have been up to now at the domestic level deflationary
rather than inflationary. On the other hand, viewed in conjunction with US credit-market
developments, it could mean that US monetary conditions have given sufficient
encouragement to domestic credit creation and net expenditure abroad to outweigh any
domestic expenditure effects deriving from the growth of non-bank Euro-dollar activity.

8.

http://eudirect.ro/pdfs/ref_3.pdf

adoptarea monedei euro de catre Romania.

9.

http://ideas.repec.org/a/eko/ekoeko/3_41.html

The premises and assumptions of monetary integration in

Europe against the background of the theory of optimum
currency area
Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Tomasz yziak
Additional information is available for the following registered author(s):

Tomasz Lyziak

Abstract

The creation of the Economic and Monetary Union on the 1st January 1999 and the
introduction of the common currency euro enlivened the discussion on the subject of the
theory of optimum currency area and their practical applications. The opinions appeared
that the countries of the euro zone do not fulfill the criteria of optimum currency area,
and therefore the conducting of a uniform money policy and an irrevocably stiffening of
the currency rates inside this area may considerably hinder the efficient functioning of the
particular economies, especially in a situation of asymmetrical disturbances. This article
presents against the background of the theories of international economic relations a
historical outline of the process of economic integration in Europe. Moreover there are
discussed criteria serving to evaluate the optimality of the currency area and also there
are compiled the results of empirical research concerning the degree of fulfilling of these
criteria by the Euroland countries. The conclusion of the article is the statement that
within the euro zone there are economies to a different degree predestined to stiffen the
rates of their currencies with respect to the euro and to resign from soverainty in the
scope of money policy. The requirements of the optimum currency area are fulfilled to
the largest degree by Germany, Austria and Belgium, to the least degree by Finland and
Portugal, whereas the remaining countries of the Economic and Monetary Union are
situated on intermediate position.
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10.

http://econ2.econ.iastate.edu/classes/econ355/choi/cur.htm

Current International Monetary System

European Monetary System
Following the collapse of the Bretton woods system on August 15, 1971, the EEC
countries agreed to maintain stable exchange rates by preventing exchange fluctuations of
more than 2.25%. This arrangement was called "European snake in the tunnel" because
the community currencies floated as a group against outside currencies such as the dollar.
By 1978, the snake turned into a worm (with only German mark, Belgian franc, Dutch
guilder, Danish krone). However, a new effort to achieve monetary cooperation was
launched. By March 1979, EC established European Monetary System, and created the
European Currency Unit (ECU).
1. Prevent movements above 2.25 % around parity in bilateral exchange rates with
other member countries.
2. The European Monetary Cooperation Fund allocates ECUs to members' central
banks in exchange for gold and dollar deposits. 20% of the quota must be paid in
gold. ECU was an artificial currency and used in all intrasystem balance of
payments settlements. ECU was replaced by euro (at 1:1) on January 1, 1999.
3. provision of credit facilities for compensatory financing.
In 1987 the EC made a dramatic effort to relaunch the drive toward economic
union, and adopted the Single European Act (SEA). By SEA the EC must establish a
single market by 1992.
For EMS to work, European countries have to surrender monetary sovereignty to
the EMS. Then the EMS can create a single European Central bank (June 1998) and a
single European currency (euro 2001).
The European Union began to circulate euro since 2001 and the symbol of the new
currency is
. Not all members of the EU joined the single currency. Since its
inauguratation in 2002, euro has gained ascendancy and is valued at about $1.46 as of
December 2007.
See their Timetable.

Current Foreign Exchange Practices

As a general rule, small countries should peg the value of their currencies to a major
currency or a baske of major currencies. But there is little harm in floating their
currencies.
Large countries should adopt floating to insulate their economies from excessive
foreign shocks. China should float yuan. During the foreseeable future (next five
decades), four major currencies (USD, euro, yen and yuan) will float their currencies.
India and Russia may follow suit eventually. Large countries may not only hurt
themselves but also disrupt world trade when their currencies are pegged to another
currency to gain a large trade surplus.
Currencies of other industrial currencies are floating with respect to the dollar. Other
than that, the current system is a mixture of exchange rate arrangements.
1. 10 European currencies were aligned within margins of 2.25%, but they jointly
float against the dollar and others. Irish pound, Italian lira, Luxembourg Franc,
German mark, Belgian Franc, Dutch gilder, French Franc, Danish Krone, Spanish
peseta (plus British pound). Italian lira and Spanish peseta have wider margins of
6%. This arrangement was further simplified by the creation of euro, effectively
creating the euro area.
2. Swiss Franc, Canadian dollar, British pound, the Japanese yen and the U.S. dollar
are floating.
3. The remaining currencies of LDCs pegged to major currencies or baskets, as of
March 31, 1991.
4. Imports of East Asian countries are often invoiced in dollars. For example, about
70% of Japan's imports are invoiced in dollars. This dollar invoicing practically
expands the dollar area to include Japan and other East Asian countries (Ronald
McKinnon).
27 pegged to $
+ 14 pegged to French Franc
+ 5 pegged to another currency
+ 6 to SDR
+ 34 to Non-SDR baskets
____________________________
= 86 countries
10 members of EMS
+ 5 limited flexibility relative to $
+ 5 peg, but adjusted frequently
+ 22 (managed float/wide band around a peg)
+ 27 independent floating

____________________________
= 68 countries
Total: 154 countries
The current system is a system of currency areas:
Dollar area (including East Asia that practices dollar invoicing), euro area, SDR
area. Eventually, currencies of Brazil, Russia, India and China will become
increasingly important during the next four decades.

Figure from Joseph Daniels and David Van Hoose

As of 2007, 111 countries adopted fixed exchange rates. Specifically,

41 countries have no separate legal tender, 7 countries have
currency boards, 52 countries have fixed pegs, 6 horizontal
bands, and 5 crawing pegs.
76 countries adopted floating. (source: IMF).
Managed Float

The current system is a managed float, rather than pure or clean float. The amount of
compensatory financing or intervention of national monetary authorities has not declined.
The reasons are:

The response of imports and exports is not spontaneous, but occurs only after a
lag (which can take up to a year or more). During the period of adjustment, some
surpluses and deficits appear in the balance of payments, which must be financed
by the monetary authorities.
Wide fluctuations of exchange rates may have undesirable effects on inflation,
employment and international competitiveness. Thus, central banks may go
beyond smoothing daily and weekly fluctuations and maintain the exchange rates
at target levels. In this sense, the managed float resembles adjustable peg system.

JAMAICA ACCORD

Beginning 1972, US and European countries negotiated on the reform of the international monetary system. A
reached in Jamaica in January 1976.

Floating of currencies had been forbidden under the Bretton Woods system, but was tentatively adopted as a t
established as it appeared as the only viable system for two reasons (i) continued growth of world trade witho
with two oil crises with relative ease.

A new Article IV of Agreement was approved by the Board of Governors in April 1976, and was ratified by 2
(copy) (first permitted creation of SDR) is:

1. legitimizing floating rates. A member country is free to choose its own exchange rate system.
freely floating, managed float, pegged to a currency or a group of currencies or SDR. Not to gold.

2. The Fund will exercise surveillance over the exchange rate policies, and adopt specific principles to gu
3. By an 85% majority, the Fund may reintroduce a system of adjustable peg. However, a member may r
4. downgrade the monetary role of gold (gold cannot be used for international transactions).
5. designate SDR as the principal reserve asset in the international monetary system.

Principles adopted in 1977

1. a member shall avoid manipulating exchange rates to prevent balance of
payments adjustments or to gain unfair advantage over other countries. (e.g., do
not devalue to maintain surplus)
2. a member should intervene in the exchange markets if necessary to counter
disorderly conditions.

3. A member should take into account the interests of other member countries,
including the countries whose currencies they use to intervene.

Evaluation

1.
2.
3.
4.
5.

Floating rates have not reduced international trade and investment or caused a disintegration of interna
have not resulted in quick adjustment in trade flows (deficits/surpluses persisted)
exchange rates were volatile.
Increasingly there are economists who claim that there is overmuch instability. The Asian currency cri
It has been argued that only currencies of small countries might be pegged to major currencies such as
dollar. However, G-4 stabilized Japanese yen in the mid 1980s.
6. Pivotal role of $ has diminished (as prime reserve asset => SDR). Whether euro will play a major role
steadily appreciated. This trend will continue until China stops its pegging to USD.

7. IMF does not have any power to discipline members that violate the rules. All it can do is reject loan r
no mechanism to settle currency disputes. Also, international reserve assets of some countries far exce

Plaza Agreement and Louvre Accord

In September 1985, the Group of Five (US, UK, Japan, Germany, and France) met at the
Plaza Hotel in New York. In the Plaza Agreement, the G5 announced that they would
collectively intervene to lower the value of dollar, which was believed to be too high at
the time.
In February 1986, the Group of Seven (G5 + Italy and Canada) met at Louvre in
France, and announced that dollar reached a level consistent with the underlying
economic conditions, and that they would intervene only as needed to insure stability.
These countries intervene at times, on unannounced basis. Under the Louvre Accord,
nations will intervene on behalf of their currencies as needed. Thus, we are under a
managed float.

New Problems
Even though the Group of Seven have stayed away from routine exchange rate
management, there still are a number of countries that peg their currencies to the dollar.
When these pegged currencies are undervalued, such pegging in general causes US trade
deficits. For example, US bilateral trade deficit with China in 2005 was $201 billion. In
July 2005, China adopted a new policy, pegging Renminbi to a basket of currencies
(USD, euro, yen and won), but it is not freely floating vis--vis other currencies. As of
December 2007, international reserve asset of the European Central Bank is only about
360 billion euro, but China's cumulative trade surplus is over $1.4 trillion.

11.

http://www.encyclopedia.com/doc/1G1-18367833.html