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The euro - the EU single currency

Latest news about the European Union's single currency.

Liquidity Coverage Requirement Delegated Act
The European Commission has adopted delegated acts under the Solvency II Directive and the Capital Requirements Regulation which will help promote high quality securitisation, ensure that banks have sufficient liquid assets in testing circumstances and introduce international comparability to leverage ratios. Today's package is part of the ongoing calibration of the regulatory framework to ensure that it enables the financial sector to effectively support the real economy, without jeopardising financial stability. It is also part of the overall objective of the European Commission to boost jobs, growth and investment. As President-elect Juncker announced in his Political Guidelines of 15 July, he intends to mobilise up to € 300 billion in additional public and private investment in the real economy over the next three years by proposing an ambitious Jobs, Growth and Investment Package during the first three months of the mandate of the next European Commission.

European Investment Bank
The European Investment Bank is owned by the 28 EU countries. It borrows money on the capital markets and lends it at a low interest rate to projects that improve infrastructure, energy supply or environmental standards both inside the EU and in neighbouring or developing countries.

2014 Convergence Report and Lithuania
The European Commission released on 4 June its 2014 Convergence Report, which assesses eight EU Member States' readiness to join the single currency. These countries have made uneven progress on the road to euro adoption, but Lithuania stands out from this group as it now fulfils the convergence criteria.

Convergence Report 2014
Convergence Reports examine whether Member States satisfy the conditions for adopting the single currency. Convergence reports are issued by the European Commission and the European Central Bank every two years, or more often if a country intending to join the euro requests it. These reports form the basis for the decision on whether a Member State may join the euro area. The 2014 Convergence Report, released on 4 June 2014, is a regular biennial report and examines progress with convergence in eight Member States with a derogation - Bulgaria, the Czech Republic, Croatia, Lithuania, Hungary, Poland, Romania and Sweden. It contains the Report from the Commission and the accompanying Staff Working Document with a more detailed analysis of the fulfilment of the criteria by all countries assessed. The report concludes that Lithuania fulfils all conditions for adopting the euro.

European Central Bank
The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area. The euro area comprises the 18 European Union countries that have introduced the euro since 1999.

Protection of euro against counterfeiting
EU Finance Ministers backed measures on 6 May that will reinforce the protection of the euro and other currencies through criminal law measures. These will include tougher sanctions for criminals and improved tools for cross-border investigation. The directive was backed by the European Parliament on 16 April and is expected to enter into force in June 2014.

Legislation against euro-counterfeiting
To protect the euro in the eurozone and beyond, EU laws aim to ensure proper coordination of anti-counterfeiting measures between national authorities and adequate penalties for counterfeiters under national criminal law.

EU Bank Recovery and Resolution Directive
Three measures to ensure that banks shoulder the risks of failure rather than relying on taxpayers to bail them out were approved by European Parliament on 14 April 2014. Two deal with restructuring and winding down troubled banks, and the third ensures that banks, not taxpayers, guarantee deposits under EUR 100,000 in the event of a run on a bank. These measures complement the single bank supervision system, already in place, and take the EU far down the road towards banking union.

Single Resolution Mechanism: a major step towards completing the banking union
The European Parliament and the Council reached on 20 March 2-14 a provisional agreement on the proposed Single Resolution Mechanism (SRM) for the Banking Union.

Banking Union: proposal for a Single Resolution Mechanism (SRM)
The European Parliament and the Council reached on 20 March 2014 a provisional agreement on the proposed Single Resolution Mechanism for the Banking Union. The Commission proposed a Single Resolution Mechanism for the Banking Union. The Single Resolution Mechanism complements the Single Supervisory Mechanism which was proposed by the Commission in September 2012. It is set to centralise key competences and resources for managing the failure of any bank in the Euro Area and in other Member States participating in the Banking Union.

Euro: the international monetary system
International organisations provide meeting points for the major economies to discuss common challenges and their solutions. As a result of the significant role of the euro in international financial markets, the institutions of the European Monetary Union (EMU) and the euro area are playing an increasingly important role in these discussions.

The Euro and Economic and Monetary Union
All EU Member States form part of Economic and Monetary Union (EMU), which can be described as an advanced stage of economic integration based on a single market. It involves close co-ordination of economic and fiscal policies and, for those countries fulfilling certain conditions, a single monetary policy and a single currency – the euro.

Regulatory Technical Standards to implement the single banking rule book (capital requirements - CRD IV package)
The European Commission has adopted a package of Regulatory Technical Standards (RTS) needed to implement important provisions of the Capital Requirements Regulation and Directive (CRR/CRD). The nine RTS define the ways in which competent authorities and market participants must, inter alia, handle disclosures linked to securitisation instruments, measure potential losses from derivative positions and counterparty failure, as well as specifying the types of instruments that can be used for paying bonuses.

New standards to increase transparency over bankers' pay
The European Commission adopted on 4 March Regulatory Technical Standards (RTS) on criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile (so-called ‘material risk takers’). These standards identify risk takers in banks and investment firms. This matters because the risk takers are the people who have to comply with EU rules on variable remuneration (including bonuses). These standards supplement the requirements of the Capital Requirements Directive (CRD IV) which entered into force on 17 July 2013 (see MEMO/13/690) and which strengthened the rules regarding the relationship between the variable (or bonus) component of total remuneration and the fixed component (or salary). For performance from 1 January 2014 onwards, the variable component shall not exceed 100% of the fixed component of the total remuneration of material risk takers. Under certain conditions, shareholders can increase this maximum ratio to 200%.

The European Banking Federation
In its 50 years of existence, the EBF has established itself as a prominent interlocutor for the European institutions when laying out their legislative initiatives. Its aim is to ensure that the experience and the views of banks are taken into consideration in the shaping of relevant policies.

Structural measures to improve the resilience of EU credit institutions
The European Commission has proposed new rules to stop the biggest and most complex banks from engaging in the risky activity of proprietary trading. The new rules would also give supervisors the power to require those banks to separate certain potentially risky trading activities from their deposit-taking business if the pursuit of such activities compromises financial stability. Alongside this proposal, the Commission has adopted accompanying measures aimed at increasing transparency of certain transactions in the shadow banking sector. These measures complement the overarching reforms already undertaken to strengthen the EU financial sector.

Reporting and transparency of securities financing transactions
The European Commission has proposed new rules to stop the biggest and most complex banks from engaging in the risky activity of proprietary trading. Alongside this proposal, the Commission has adopted accompanying measures aimed at increasing transparency of certain transactions in the shadow banking sector. These measures complement the overarching reforms already undertaken to strengthen the EU financial sector.

Financial Stability Board (FSB)
The Financial Stability Board (FSB) has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. It brings together national authorities responsible for financial stability in significant international financial centres, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts.

Single Euro Payments Area (SEPA)
The Single Euro Payments Area (SEPA) will allow customers to make euro payments throughout Europe as easily, securely and efficiently as they do today within their own countries. Once SEPA has been completed, there will no longer be any distinction between national and cross-border euro payments: they will all be domestic.

Latvia 18th EU Member State to adopt the euro
Following Latvia's adoption of the euro on 1 January 2014 - the 15th anniversary of the launch of the euro in 1999 - 18 Member States and 333 million Europeans share the same currency. This is a major achievement for Latvia and for the euro area as a whole. Latvians start withdrawing euro cash and paying for their purchases in euro. This has been made possible thanks to thorough preparations ahead of the introduction of the EU's single currency.

European Banking Authority (EBA)
The European Banking Authority (EBA) is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector. The main task of the EBA is to contribute to the creation of the European Single Rulebook in banking whose objective is to provide a single set of harmonised prudential rules for financial institutions throughout the EU. The Authority also plays an important role in promoting convergence of supervisory practices and is mandated to assess risks and vulnerabilities in the EU banking sector.

Euro Students' Award
This is a competition open to all secondary school students who enjoy learning about economics and would like to know more about monetary policy issues. There are prizes to be won, as well as the opportunity to participate in the European award event at the European Central Bank in Frankfurt am Main, Germany.

Legislative package for banking supervision in the Eurozone
Euro-MPs on 12 September gave their green light to the EU bank supervision system which will bring some 150 of the EU's largest banks under the European Central Bank's direct oversight from September 2014.

EU roadmap for tackling the risks inherent in shadow banking
The Commission has today adopted a communication on shadow banking and proposed new rules for money market funds (MMFs). The communication, a follow-up to last year's Green Paper on Shadow Banking, summarises the work undertaken so far by the Commission and sets out possible further actions in this important area. The first of these further actions - the proposed new rules for money market funds - is unveiled today and aims to ensure that MMFs can better withstand redemption pressure in stressed market conditions by enhancing their liquidity profile and stability.

Single Resolution Mechanism for the Banking Union
The European Commission has today proposed a Single Resolution Mechanism (SRM) for the Banking Union. The mechanism would complement the Single Supervisory Mechanism (SSM) (IP/12/953) which, once operational in late 2014, will see the European Central Bank (ECB) directly supervise banks in the euro area and in other Member States which decide to join the Banking Union. The Single Resolution Mechanism would ensure that – not withstanding stronger supervision - if a bank subject to the SSM faced serious difficulties, its resolution could be managed efficiently with minimal costs to taxpayers and the real economy.