A characteristic feature of our time is the development of regional economic and monetary integration, primarily in Western Europe. The mechanism of currency integration includes a set of monetary and credit methods of regulation, through which the convergence and mutual adaptation of national economies and monetary systems are carried out.
In December 1991, in Maastricht, the EU countries agreed on the timing of the transition to the European Monetary Union. The Treaty was signed on February 7, 1992 and entered into force on November 1, 1993.
In the first phase of the transition, all EU members were required to join the Common Exchange Mechanism and keep their currencies within an agreed corridor. Controls on capital spillovers between countries were also abolished. Since 1994, the second phase of three years has come. The convergence of the policies of all countries on inflation, interest rates, balance of payments and tax policies was to guarantee the stability of exchange rates within an even narrower framework. In the third stage, the countries switched to the use of a single currency – the euro, which was introduced in non-cash form on January 1, 1995.
The created European Central Bank essentially turns into an issuer of European banknotes, conducting a single monetary policy of the Union: it determines the exchange rate of the euro against the dollar and other external currencies, interest rates on euro loans, conditions for the purchase and sale of European securities.
The period from January 1, 1999 to December 31, 2001 was the beginning of the real activity of the Economic and Monetary Unions. The rates of the national currencies of the participating countries are strictly fixed in relation to the euro, which becomes an independent, full-fledged monetary unit. During this period, national currencies function in parallel and on a par with it.
After 31 December 2001, all accounts must be converted at official rates to euros.
By January 1, 2002, new banknotes and coins in euros were put into circulation, which replaced the previous ones in national monetary units.
After the first of July 2002, Euro banknotes and Eurocoins become the only legal tender in their respective countries.
In practice, the replacement of national currencies at fixed rates began on January 1, 1999, since which time all references in legal documents to the ECU have been replaced by references to the euro at a rate of 1:1.
Any payment obligations denominated in euros or national monetary units of a given Member State may be repaid by the debtor either in euros or in national currency.
During the transition period from 1 January 1999 to 31 December 2001, the principle of freedom of choice for participants in transactions (national currency or euro) was in force.
In the future, the use of the euro in international settlements, credit relations, operations in financial markets predetermines its role as a reserve currency, which will take its place both in official foreign exchange reserves concentrated in the central banks of countries, and in the reserves of commercial banks – in the accounts of their customers and on correspondent accounts.
The mechanism of currency integration includes a set of monetary and credit methods of regulation, through which the convergence and mutual adaptation of national economies and monetary systems are carried out.
Obviously, the emergence of a new single currency will have an impact on the monetary system as a whole. There will be a shift from the dominant role of the dollar to currency pluralism.
Consequently, the process of globalization of economic activity is developing with the help of diverse international economic relations in the field of production, trade, and finance.
Thus, it is possible to identify a number of trends in the process of formation and development of the world monetary system and currency regulation. The process of development of the world monetary system has passed through a number of stages – from the use of the gold standard to the formation of separate currency zones, from the parallel use of gold and the dollar in the postwar period to the displacement of metal from the international payment turnover and its replacement with the US dollar. In recent history, on the one hand, there is a globalization of the dollar and the strengthening of its leading positions as an international foreign exchange reserve, and on the other hand, the process of regionalization is developing with the allocation of the key currency euro and attempts are being made to promote the countries of Southeast Asia, the CIS, etc. in this direction.
In addition, there are still hidden trends in the restructuring and polarization of the global foreign exchange market, created on the basis of the US dollar. There is a need to change the functions of the international financial institutions. In this regard, the key challenges of the new millennium will be: revision of the structure of world foreign exchange reserves, international liquidity; an attempt to abandon the dominant role of the US dollar by many states and the transition to a multipolar monetary system. Further, based on objective global trends in world development in general and the foreign exchange market in particular, it can be assumed that in the long term there is a need and expediency of forming a single world currency.