Sm51 group Eshmurodov Ilyos

The Maastricht Treaty

• The members of the European Union concluded this treaty in December 1991
• This treaty:
• Laid out terms goals of harmonized social and welfare policies
• Specified a timetable for the adoption of a single currency to replace all individual currencies

The Euro

• On December 31, 1998, the final fixed rates between the 11 currencies and the euro were put into place
• On January 1, 1999,the euro was officially launched as a single currency for the European Union

• The monetary policy for the EMU will be conducted by the European Central Bank (ECB) and has a single responsibility of safeguarding the stability of the euro
• On January 4, 1999, the euro began trading on world currency markets

International Money Markets

• International money markets, often termed the Eurocurrency markets, constitute an enormous financial market that is in many ways outside the jurisdiction and supervision of world financial and governmental authorities

Eurocurrency Markets and Eurocurrency Interest Rates

• A Eurocurrency is any foreign currency denominated deposit or account at a financial institution outside the country of the currency’s issue

• While there are hundreds of different major interest rates around the globe, the international financial markets focus on the interbank interest rates

Defining International Financing

• The definition of what constitutes an international financial transaction is dependent on two characteristics:
• Whether the borrower is domestic or foreign
• Whether the borrower is raising capital denominated in the domestic currency or a foreign currency