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9.7 The Euro

In January 1999, the Euro was designated the future currency for all EU

member states. The euro is the culmination of a long-term effort to create
monetary union within the EU. The goal is that the movement of capital,
labour, goods, and services between the members is as easy as within

them. The physical (borders), technical (standards) and fiscal (taxes)
barriers among the member states are removed to the maximum extent

possible. These barriers obstruct the freedom of movement of the four
factors of production. To remove these barriers the member states need

political will and they have to formulate common economic policies. The
euro will enhance the efficiency of the Single European Market and act as
a step towards complete economic union in the EU (Harrison et al., 2000,

p. 244). The European Central Bank is responsible for implementing a
single monetary policy and maintaining price stability in the EU. With the

ceding of their primary responsibility to the European Central Bank, the
national central banks have become part of the European System of
Central Banks, with the governor of each member’s central bank sitting on

the European Central Bank Council, responsible for formulating its
monetary polices. The euro is viewed as an instrument of economic and

monetary union, which itself has a political dimension. Once the Euro is
established completely between all European countries, it will lead to a
greater degree of political union. The UK has not signed up to the Euro

(but is a member of the European Union), preferring to retain its
sovereignty in this area and its own currency – the UK pound (£).

9.7.1. Member states

The European Union comprises 27 member states. Each of these EU

member states is a sovereign nation that has joined the European Union.
All EU member states have representation in the institutions of the
European Union. From an original EU member states list of six countries

in 1951, a total of six enlargements have been taking place over the years,