Beruflich Dokumente
Kultur Dokumente
Presented By:
Vandana Rathore
Salil Wadhawan
Kanishk Arora
Talha Ahsan
Tanya Arora
Gaurav Wadehra
INTRODUCTION
• Established by the provisions in the 1992 Maastricht treaty in order to
participate in the currency.
• Euro area has the highest share of world trade-total world exports of
19.5%.
• The name euro was officially adopted on 16 Dec 1995.
• Introduced to world financial markets as an accounting currency on
11 Jan 1999
OBJECTIVES
Interest rates: not to exceed 2%points of the average of the best three performing
countries
Criteria-1
Applicant countries must have stable institutions than guarantee democracy, the
rule of law, human rights and protection of minorities the political criteria)
Criteria-II
Applicant countries must have a functioning marketing economy and the capacity
to cope with competitive pressures (the economic criteria)
Criteria-iii
Applicant countries must have the ability to take all the obligations of membership
EUROZONE
US$ TO EURO EXCHANGE RATE
Trade INFLATION
RATE
Investment
• Mid 1999: 1.0%
Inflation • Mid 2000: 2.0%
Exchange risk • Mid 2001: 2.8%
• Mid 2002: 1.9%
Financial integration • Mid 2003: 1.9%
Effect on interest rate • May 2004: 2.5%
Price convergence • May 2005: 2.0%
• May 2006: 2.5%
Tourism • May 2007: 1.9%
• May 2008: 3.7%
• May 2009:
0.0%
EURO CRISIS
GREECE’S TROUBLES
Italy France
Exchange rate wrt. Germany Fear of Delocalization
increased to < 20% budget deficit higher than 3% of
One of Unit of Labour cost 9% more GDP consistently; Blames
than Germany recession
Devaluation not an option; budget Spain
deficit higher than 3% of GDP
consistently Benefited by low interest rate;
Reverting back to Lira not possible Economic growth was 3.1% in
2004 and 2.4% in 2005
Germany
10% depreciation in real exchange Had lower wage rate; reduce
rates inflation rate
Strong exports; Stagnating domestic But had high unemployment
demand
Economic Growth of .6% since 2001
till 2005
budget deficit higher than 3% of
GDP consistently
21
EFFECT ON EURO
Greece’s debts effects pulls down the value of euro and
stock markets .
The Euro crisis is also impacting the value of the US dollar
The accounting impact of this sovereign crisis
is the impact it is having on determining the fair value of
all securities denominated in Euro. This also impacts trade
based earnings statements and the value of securities
of all companies which trade with the
EURO area in some manner or other
Currency value of the entire European Continent is now
linked to the fortunes of one single country
CONCLUSION
New rules to enforce transparency & corporate governance
for all.
Political unity for enforcing stricter monetary policies.
Even though Euro is facing difficult times as a single
currency among different nations, it can be stabilized
through a new Euro-Dollar exchange rate
EU depends on Euro’s stability to be politically united
The Euro’s credibility has taken a major hit.
Integrity of EMU is diminished when fiscal constraints are
ignored.
Even if Euro won’t fail, its value will respond to the traumas
of the users.
PREDICTION