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The European Monetary Union

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The European Monetary Union
Research Paper France and the United Kingdom have very different approaches when it comes to monetary policy. France is a member of the Eurozone and uses the Euro as their currency, with the European Central Bank being their central bank. The United Kingdom has decided to stay out of the European Union and stick with their currency of the Pound. Their central bank is the Bank of England located in London. Both of these countries are 2 of the biggest, most powerful countries in the European Union so they both have quite the impact on how the European Union behaves. Both France and the United Kingdom are members of the Economic and Monetary Union of the European Union. While France is a full member of the Eurozone, the United Kingdom is only a member of the Economic and Monetary Union of the European Union with an opt out from the Eurozone. The European Central Bank in June of 1998 and in December of that year the conversion rates between the eleven national currencies and the Euro were established. There was then a 3 year transition phase where the Euro was actual currency and so were the national currencies, although the national currencies had ceased to being printed and legally ceased to exist. The function of the European Central Bank is to administer the monetary policy of the countries in the Eurozone. The current President is Mario Draghi, the former governor of the Bank of Italy. The primary objective of the European Central Bank is to keep inflation and deflation low, or to maintain stable prices throughout the Eurozone. The European Central Bank has the exclusive right to authorize the printing or issuing of euro bank notes. Member states can issue Euro coins but the amount has to be authorized by the European Central Bank before they can. One of the last functions of the ECB is to regulate the financial and banking market in the member states. This is shown when they bailed out the banks with billions of euros during the financial crisis in


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