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 committee was composed of the governors of the then European Community (EC) national central banks; Alexandre Lamfalussy, the then General Manager of the Bank for International Settlements (BIS); Niels Thygesen, professor of economics, Denmark; and Miguel Boyer, the then President of the Banco Exterior de España.
The resulting Delors Report proposed that economic and monetary union should be achieved in three discrete but evolutionary steps.
| STAGE ONE starting 1 Jul 1990 |
Complete freedom for capital transactions; |
|---|---|
| Increased co-operation between central banks; | |
| Free use of the ECU (European Currency Unit, forerunner of the €); | |
| Improvement of economic convergence; |
| STAGE TWO starting 1 Jan 1994 |
Establishment of the European Monetary Institute (EMI); |
|---|---|
| Ban on the granting of central bank credit; | |
| Increased co-ordination of monetary policies; | |
| Strengthening of economic convergence; | |
| Process leading to the independence of the national central banks, to be completed at the latest by the date of establishment of the European System of Central Banks; | |
| Preparatory work for Stage Three; |
| STAGE THREE starting 1 Jan 1999 |
Irrevocable fixing of conversion rates; |
|---|---|
| Introduction of the euro; | |
| Conduct of the single monetary policy by the European System of Central Banks; | |
| Entry into effect of the intra-EU exchange rate mechanism (ERM II); | |
| Entry into force of the Stability and Growth Pact; |
On the basis of the Delors Report, the European Council decided in June 1989 that the first stage 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. These were laid down in a Council Decision dated 12 March 1990. 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.
In view of the relatively short time available and the complexity of the tasks involved, the preparatory work for Stage Three of Economic and Monetary Union (EMU) was also initiated by the Committee of Governors. The first step was to identify all the issues which should be examined at an early stage, to establish a work programme by the end of 1993 and to define accordingly the mandates of the existing sub-committees and working groups established for that purpose.
To achieve Stages Two and Three, the Treaty establishing the European Economic Community (the Treaty of Rome) needed to be revised in order to establish the required institutional structure. To this end, an Intergovernmental Conference on EMU was convened, which was held in 1991 in parallel with the Intergovernmental Conference on political union.
The negotiations resulted in the Treaty on European Union which was agreed in December 1991 and signed in Maastricht on 7 February 1992. However, owing to delays in the ratification process, the Treaty (which amended the Treaty establishing the European Economic Community – changing its name to the Treaty establishing the European Community – and introduced, inter alia, the