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 rapprochement and mutual adaptation of national farms and currency systems are carried out.
In December 1991, in Maastricht, EU countries agreed on the timing of the transition to the European Monetary Union. The contract was signed on February 1992 and entered into force on November 7 1993.
At the first stage of the transition, all EU members were to join the Unified Mechanism currency exchange and keep the exchange rates of your currencies within the framework of an agreed corridor. Control over the “overflows” of capital between countries has also been canceled. Since 1994, the second stage of three years has begun. The convergence of policies of all countries regarding inflation, interest rates, balance of payments and tax policies was to guarantee the stability of exchange rates in an even narrower framework. At the third stage, the countries switched to the use of a single currency – the Euro, which was introduced in non-cash form since 1 January 1995.
The created European Central Bank essentially turns into an issuer of European banknotes pursuing a unified monetary policy of the Union: determines the euro against the dollar and other foreign currencies, interest rates on euro loans, terms of sale of European securities.
The time interval, from 1 January 1999 to December 31, 2001, was the period of the beginning of the real activities of the Economic and Monetary Unions. The rates of national currencies of the participating countries are tightly fixed in relation to the Euro, which becomes an independent, full-fledged monetary unit. During this period, national currencies function in parallel and on an equal basis with it.
After December 31, 2001, all accounts must be converted at official rates in Euros.
By 1 January 2002, new banknotes and coins in Euros were put into circulation, which replaced the previous ones in national currency units.
After the first of July 2002, euro banknotes and euro coins become the only legal tender in the respective countries.
In practice, the replacement of national currencies at fixed rates began with 1 January 1999. From the same time, all references in legal documents to Eku are replaced by links to the Euro at the 1: 1 rate.
Any payment obligations expressed in the Euro or national monetary units of a given participating country may be repaid by the debtor either in the Euro or in national currency.
In the transition period from 1 January 1999 to December 31, 2001, the principle of freedom of choice for transaction participants (national currency or Euro) was in effect.
In the future, the use of the Euro in international settlements, credit relations, and operations in financial markets predetermines its role as a reserve currency, which will take its place in official foreign exchange reserves concentrated in the central banks of countries, and in the reserves of commercial banks – on 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 rapprochement and mutual adaptation of national farms and currency systems are carried out.
Obviously, the emergence of a new single currency will affect the monetary system as a whole. There will be a transition 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 ties in the field of production, trade, and finance.
Thus, we can distinguish a number of trends in the process of formation and development of the world monetary system and currency regulation. The process of developing the world monetary system has passed a number of stages – from the use of the gold standard to the formation of individual currency zones, from the parallel use of gold and the dollar in the post-war period to the displacement of metal from the international payment turnover and its replacement with the American dollar. In recent history, on the one hand, the dollar is being globalized and its leading position as an international currency reserve is strengthened, and on the other hand, the process of regionalization is developing with the allocation of the key currency of the Euro and attempts are being made to advance 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 currency market, created on the basis of the US dollar. There is a need to change the functions of international financial institutions. In this regard, the key problems of the new millennium will be the revision of the structure of world currency reserves, international liquidity, the attempt to abandon the dominant role of the American dollar by many states and the transition to a multipolar currency system. In addition, 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 run there is a need and expediency of forming a single world currency.