By:-niharika, Surbhi & Yogesh

Euro

By:- Niharika, Surbhi &

OBJECTIVE • • • • • • • •

All about Euro – History Euro - unknown facts & Profile Euro Credit Euro Currency Euro Bond Euro Dollar Euro Currency Market Euro Deposit

HISTORY 1957 – The Treaty of Rome  Objective: To remove trade and tariff barriers and to form a common market.

HISTORY 1979– European Monetary System (EMS) Objective: To create a common currency.

HISTORY 1988 – Economic and Monetary Union (EMU). Objective: To realize Economic Monetary Union

HISTORY 1992 – Foundation of the European Central Bank.

HISTORY December 1995 – The official graphic symbol of the euro € is derived from the Greek letter epsilon, denoting the first letter of the word Europe.

HISTORY

Ireland, Austria, Belgium, Spain, Italy, Luxembourg, the Netherlands, Portugal, France, Finland, Germany, and from the beginning of 2001, Greece.

HISTORY 1 January 2002 – Twelve European Union Member States introduced the euro cash.

HISTORY 1 January 2008 - The euro was introduced in two other states of the European Union Cyprus and Malta.

ROLE OF EURO IN EUROPE

The introduction of the euro is an important stage in the development of the European Union (EU) and the most significant monetary reform in the global history. The introduction of the euro is the actual implementation of the Common

ROLE OF EURO IN THE WORLD

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As a global currency, the euro is taking on an important role as an international investment and reserve currency.

INTERESTING FACTS The European Union’s (EU) common currency, the euro, is legal tender not only in the fifteen euro area Member States (Ireland, Austria, Belgium, Cyprus, Greece, Spain, Italy, Luxembourg, Malta, the Netherlands, Portugal, France, Slovenia, Finland and Germany), but also

INTERESTING FACTS The EU has concluded special agreements with Monaco, the Vatican and San Marino for the euro as legal tender in these countries. They have the right to issue euro coins with their national sides, but may not issue euro banknotes. Thus, the tradition of agreements that existed

INTERESTING FACTS In Andorra, the euro replaced the Spanish peseta and the French franc that were used in this principality, though an agreement between this country and the EU has not yet been signed.

INTERESTING FACTS Also, the euro is used as a currency in Montenegro and Kosovo. Here, the euro replaced the German mark which, up to then, had been used as the local de facto currency.

INTERESTING FACTS Overseas departments, territories and islands associated with or within the euro area Member States also use the euro. Thus, the euro circulates in the Azores, Guyana, Guadeloupe, Maiote, Martinique, Reunion, San Pierre and

EURO NOTES

DOCUMENTS On 30 May 2005 the Government of the Republic of Lithuania formed the Commission for the Coordination of the Adoption of the Euro in the Republic of Lithuania, and set its main goal – to ensure the preparation and proper implementation of the National Changeover Plan. The Government of the Republic of Lithuania approved this plan by its Resolution No. 1050 of 29 September 2005.   On 25 April 2007 the Government of the Republic

EURO CURRENCY • A common currency used by many European countries. The euro was established in 1999 when 11 European countries adopted a common currency in order to facilitate global trade and encourage the integration of markets across national borders. Euro banknotes and coins began circulating in January 2002.

• Euro credit or Euro Loans are the loans extended for one year or longer. The market that deals in such loans is called Euro Credit Market. Characteristics of Euro credit • A major part (more than 80 %) of the Euro debts is made in US dollars. The second (but far behind) is Pound Sterling followed by Deutsch mark, Japanese yen, Swiss franc and others   • The common maturity for euro credit loans is 5 years. Since Euro banks accept short-term deposits and provide longterm loans, it is likely that asset liability mismatch may arise. To avoid this Euro banks often extend floating rate

PARTICIPANTS IN EURO CREDIT MARKET • The major lending banks in the Euro credit market are Euro banks, American, Japanese, British, Swiss, French, German and Asian (specially that of Singapore) banks, Chemical Bank, JP Morgan, Citicorp, Bankers Trust, Chase Manhattan Bank, First National Bank of Chicago, Barclay's Bank, National Westminster, BNP, etc. Among the borrowers, there are banks, multinational groups, public utilities, government agencies, local authorities, etc.

EURO BOND MARKET • The Eurobond market is the largest international bond market, which is said to have originated in 1963 with an issue of Eurodollar bonds by Autostrade, an Italian borrower. The market has since grown enormously in size and was worth about $ 428 billion in 1994.   • Eurobond markets in all currencies except the Japanese Yen are quite free from any regulation by the respective governments.   • Floatation costs of the Eurobond are comparatively higher than costs indicated with

EURO DOLLAR • Eurodollars are deposits denominated in US dollars at banks outside the United States, and thus are not under the jurisdiction of the Federal Reserve. Consequently, such deposits are subject to much less regulation than similar deposits within the United States, allowing for higher margins. There is nothing "European" about Eurodollar deposits; a US dollardenominated deposit in Tokyo or Caracas would likewise be deemed a Eurodollar deposit. Neither is there any connection with the euro currency. Typically the term is only used for US dollars in European banks,

The money market in which euro currency held in bank outside of the country, where it is legal tender is borrowed and let by banks in europe.

FEATURES OF EURO CURRENCY MARKET • Since a bank outside the domestic country does not obey the domestic financial regulation and pay any tax to the domestic country • Because of the same reason the lending rate is also lower than in the domestic country’ • Short term financial market • LIBOR

4 SEGMENTS OF EURO CURRENCY MARKET • Euro credit market • Eurobond market • Eurocurrency market • Euronote market

EURO DEPOSIT • The equivalent of a money market rate on cash deposits made in the euro currency. Euro deposit rates will usually be quoted as "money market euro deposit rates" and are typically only offered to U.S. investors with minimum investments of greater than 10,000 euros. • Euro deposits pay a floating interest rate (like a money market account) and offer the chance for capital appreciation if the euro appreciates against the investor's home currency (presumably the dollar). • Euro deposit rates are based on the euro interbank offer rate, which is set by

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