Topic: The Euro and the European Monetary Process - Past, Present and Future

Lecturer: Dr. Günter Grosche

                ---Prominent European economist

                ---Former Special Advisor to the president of the Eurogroup

Time: 15:30 – 17:00, Dec 16th (Wednesday)

Place: Lecture Hall (3rd Floor), Lingnan Hall, Sun Yat-sen University

Language: English

Note: Please arrive 15 minutes before the lecture starts.

Delegation of the EU to China has invited the famous economist Dr. Guenter Grosche to deliver a lecture tour in Peking University, Fudan University, Nanjing University and Sun Yat-sen University, on the topic of “The Euro and the European Monetary Process - Past, Present and Future”.

You will have opportunities to raise questions and communicate with Dr. Guenter Grosche! Welcome to all the teachers and students who are interested in finance to take part in it!

Introduction of Speaker

Mr Grosche was closely involved in the process leading to the creation of a single currency in Europe, the euro. In 1991 he was a member of the German team which negotiated with other European Union member states the so-called Maastricht Treaty, the legal foundation of the new currency. From 1993 to 1998 he was the Secretary of the EU’s Monetary Committee which conceived most of the detailed provisions for the introduction of the euro. From 1999 to 2004 he was the Secretary of the EU’s Economic and Financial Committee and the Economic Policy Committee. These committees prepare the economic policy coordination exercises at the monthly meetings of the EU economic and finance ministers and of the Eurogroup, a gathering of those finance ministers whose countries have adopted the euro.

After retirement Mr Grosche served as special advisor to the president of the Eurogroup.

During the 1980ies, Mr Grosche was a member of the Executive Board of the International Monetary Fund.

Outline of Lecture

1. A short history of European integration

1.1. The discovery of the integration method

1.2. The European Economic Community (EEC): a balance between community and nation states aspirations

1.3. Today: a European Union of 27 member states with many activities going beyond the economic sphere

2. The euro: the boldest integration step yet

2.1. Steps towards a European Economic and Monetary Union (EMU)

2.1.1.  1972:   The “Snake in the tunnel”

2.1.2.  1978:   The European Monetary System (EMS) with its Exchange Rate System (ERM)

2.1.3.  1991:   The “Maastricht”-Treaty – the foundation of EMU

2.1.4.  1999:   The introduction of the euro

2.1.5.  Today: 16 member countries of the euro area

2.2. The EMU concept

2.2.1. Principles

2.2.2. A centralised monetary policy

2.2.3. Decentralised economic and budgetary policies

2.2.4. The benefits of coordination of national policies at European level

2.2.5. The “Eurogroup”:  the coordination body

2.2.6. A “Stability and Growth Pact”: a tool for budgetary coordination and discipline

2.3. Euro area performance

2.3.1. A good start: from 1999 to 2007

2.3.2. The global financial crisis: the euro prevented worse from happening.

3. The future of the euro and monetary cooperation in Europe

3.1. Economic prospects and challenges

3.1.1. Pressure on public finances

           -  Demand for higher expenditure ...

           -  may clash with high debt levels.

3.1.2. Budgetary policy dilemma and exit strategy

            - The Stability and Growth pact provides direction.

            - The way out of the dilemma ...

            - will help to avoid defaults.

3.1.3. The role of the Eurogroup

            - Limitations

            - Improvements under way

3.1.4. Monetary policy dilemma

            - The European Central Bank will act ...

            - cautiously.

3.2. The euro as an international currency

3.2.1. The euro is getting stronger: is that a problem?

3.2.2. Competitiveness of the euro area must be improved

3.2.3. A stronger cooperation with other currency areas is desirable

          - The external representation of the euro area is lacking clout

3.2.4. The euro as an international reserve currency

           - The euro is the world’s second biggest reserve currency

           - The role of the dollar

3.3. Enlargement of the euro area

3.3.1. Prospects for further accessions

3.3.2. Examination on the basis of four convergence criteria

4.  Concluding remarks

   -  50 years of economic integration in Europe provided for prosperity and peace.

   -  The euro is crowning these endeavours.

   -  For its full success it needs solidarity among its member states. They have to take regard of each other by

      *    limiting the increase of national public debt levels,

·         improving the adaptability and flexibility of their economies,

·         respecting the independence of the European Central Bank,

·         working together on the international scene.