It is envisaged that all 15 members of the European Union will eventually join EMU. Only 11 EU countries will participate in the first phase in January 1999: Austria, Belgium, Finland, France, Germany, Holland, Ireland, Italy, Luxembourg, Portugal and Spain.

Euro

The ultimate goal of Emu is to introduce a single European currency called the euro.

The euro will be formed by merging the national currencies at fixed exchange rates.

On January 1, 1999 the euro will become legal tender in the qualifying countries.

E-Day

But notes and coins of national currencies will be in circulation until the final changeover to the euro on January 1, 2002, which has been dubbed "E-day".

National currencies will be completely replaced by euro notes and coins by the middle of 2002.

Emu will have huge financial and political implications. It removes the existence of individual currencies and national monetary policies.

It will have the effect of bringing about a merger of the member countries' capital markets.

New banks

From June '98 onwards, a new institution, the European Central Bank or ECB will oversee and control a common European monetary policy and, most importantly, will set a uniform interest rate.

The ECB will replace the European Monetary Institute or EMI which has been in operation since January 1, 1994.

The national central banks of participating countries will join the ECB to form the European System of Central Banks or ESCB.