Economy and monetary union in Europe

The 1992 Maastricht Treaty on European set the framework for forming and Economic and Monetary Union (EMU) with a single currency, the euro and single monetary policy defined by common independent authority, The European Central Bank. EMU creates various operating risks for IBRD because significant changes will have to be implemented including currency conversion, modification of payment and settlement systems, re-denomination of currencies and financial report in changes. The main challenge posed by EMU is the extended transition period (three years) when payments can be made in each participating member state in euro and in the previous national currency which remains a sub denomination of the euro during the transition. IBRD has created an international euro task force which is working in conjunction with various business unit groups to identity and address the changes required by the introduction of the euro. Management expects that a plan will be adopted and changes will be International Scenario implemented on a schedule which meets the EMU start date of January 1, 1999.