Europe In 2010
...which people,
goods, services and capital move without restrictions. It creates the framework for economic growth and stability and is
underpinned by an independent central bank and legal obligations on the participating Member States to pursue sound
economic policies and to coordinate these policies very closely.
As trade between the EU Member States reaches 60% of their total trade, EMU is the natural complement of the single
market. This market will work more efficiently and deliver its benefits more fully with the removal of high transaction costs
brought about by currency conversions and the uncertainties linked to exchange rate instability.
EMU and the economic performance of the Euro area will have their largest external effects on neighboring economies in
western Europe and on developing and transition countries with important trade and financial links to Europe, including
countries that link their currencies to the Euro. Among emerging market economies, those likely to be most affected are the
transition countries of the central and Eastern Europe and the Baltics.
The global environment has been favorable in a number of respects for the transition to EMU and the achievements of its
objectives. The strong demand for euro-area exports from industrial countries at more advanced stages of the business cycle
and the depreciation of the currencies of euro area countries over the past four years fostered a strengthening of growth in the
euro area and helped to offset the effects of the Asian crisis.
There are also challenges for EMU in the global economic environment:
The crisis in Asia and other emerging market economies could produce adverse spillover effects and make the monetary
policy more difficult to carry out.
The continuation of the crisis could result in weakening of...
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