The 7th February marks a day of importance in Europe. It was on this day in 1992 that the signing of the treaty occurred by the European members. This treaty was the start of the joint powers where different nations that were coming together under this heading.
What it started
It is this signing of the treaty that has allowed the Euro to come into existence, this currency is now used by 18 countries. It has replaced what they had developed over centuries to become one currency that is not defined by the place, but by a group of politicians.
There is a difference with the growth of the Euro and the conception and the amount of cryptocurrencies that there are now in existence. The Euro has the backing of banking institutes and governments, with the possibility of new governments and countries being able to join this currency at a later date. The latest convert to the Euro was Latvia who joined in 2014.
United Kingdom and Denmark are the only 2 countries that have actually refused, or opted out, of the use of the currency. There are other countries that are looking to join but they are not up to the required standard set out by the EU.
What they agreed to
When these heads of states signed this agreement what, they were agreeing to a three pillar structure of the European Union, common foreign and security policy, and the justice and home affairs. The idea behind these three pillars was to allow the individual states not to lose complete control over their Home countries.
These pillars were replaced in 2007 when the single European Union or (EU) was officially created.
Why was it changed?
The reason for change is to make sure that the structure fits and moves with the changing times, it is not something that is going to sit still and wait. It needs constant revision and amendments so that it meets the needs of the countries that it is supposed to serve.
Some of the regulations in the first three pillars required that the states could not have a GDP that was no higher than 3% and the maximum amount that they were allowed was not more than 60% of the GDP.
This system is still being run today but there are not many of the European countries that are following the guidelines and they are now over this recommendation.
‘fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.’ According to Wikipedia
There are three different options when it comes to looking at a countries fiscal policy:
- Neutral fiscal policy: This is great news for the country for having a fiscal policy that balances
- Expansionary fiscal policy: This is where the government spends more than the taxes they receive; this is often seen in a recession.
- Contractionary fiscal policy: this is when the government actually spends less than what they are receiving in taxes and revenue.