THE EURO

THE EURO

It is a strategic and technical challenge for the European nations, members of the European Union. The Euro assures currency stability and an advance towards European integration. The business has eliminated the exchange risk; the functioning of markets has been improved (i.e. an easier flow of goods and services, lower transactions costs, a.s.o.). The trade between EU countries is done in Euro, an euro area has been created. It has brought about a change in the life of the Europeans (businessmen, tourists, bankers. The major banks have made the technology changes which have been required for euro compliance as they need to minimize the euro impact to their customers.

Banks have been confronted with the losing of revenue streams due to the introduction of the single currency, the impact of the new cross border payment systems.

The companies have faced important strategic, marketing and organizational challenges. It has been set up a legal framework for the use of the euro which helps the market operators to have the legal security for contracts and obligations.

1 January 1999 and 1 January 2002 was the period when the euro coexisted with the national currency. For this, it was established the legal framework that ensured the legally-enforceable equivalence between the single currency (euro) and the national currency units.

The introduction of the single currency has three phases:

the launch of the EMU (early 1998)

the start of the EMU (1 January 1999)

the single currency (begins with 1 January 2002)

Beginning with this date, euro is used in the EU countries, new coins and banknotes have been issued. The banks have completed the changeover and the national currencies have been withdrawn.

Text comprehension

Answer the questions

What does the euro assure?

Which is the currency used by the businessmen?

What have the banks done?

What has the introduction of the euro bring about?

What did the companies face?

Was it a coexistence of the euro with the national currencies?

Can you mark the main EMU phases ?

Vocabulary

Ballon ( suma mare de bani platita pt. rambursarea unui imprumut, care nu este o rata obisnuita)

Base rate (rata a dobanzii, folosita ca referinta de catre banci, pt dobanzile percepute clientilor)

Bridging loan (credit punte)

Business credit (imprumut facut corporatiilor)

Capital (valoarea totala a activelor unei persoane, fara obligatiile aferente)

Consumer credit (credit pentru bunuri de folosinta indelungata)

Credit line (limita unui credit)

EMU (European Monetary Union= Uniunea monetara europeana)

EMS (European Monetary System= Sistemul monetary european)

Exposure (riscul pe care il asuma clientul)

Franchise (licenta acordata unui producator, distribuitor care le permite acestora sa produca/vanda un anumit produs/serviciu, intr-o zona determinate, pe o perioada stabilita)

Installment (o plata dintr-o serie, mai ales la achizitionarea bunurilor in regim de vanzare in rate)

Money market unit trust (fond de investitii finaciare care investeste in instrumentele pietei monetare, pentru a oferi investitorilor venit fara risc)

Open market operations (cumpararea/vanzarea de catre guvern a obligatiunilor guvernamentale, in schimbul banilor )

Personal loan (credit pentru nevoi personale)

Ratio analysis (utilizarea indicatorilor pentru evaluarea activitatii operationale si stabilitatii financiare a unei companii)

Revolving credit (forma de credit bancar, negociat pentru o anumita perioada)

Secured (denota un imprumut /garantat/ in care creditorul obtine active de vandut ca despagubire)