HIST-1106EL Study Guide - Quiz Guide: Margaret Thatcher, European Currency Unit, European Exchange Rate Mechanism
8 Nov 2020
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1
1974 European Council Summit, Paris.
• Heads of government + Ministers of foreign affairs come together to make decisions in
principle.
• Formalization of previously informal European Council Summit Meetings, to provide
overriding political guide to the Communities. => Strengthend intergovernmental hand of
control over Communities.
• European Parliament shall be elected directly as from 1778 (due to difficulties first direct
election 1979).
1975 (1) European Unit of Account [ECU]. (Werner Plan failed.)
• Most EEC countries agreed to maintain stable exchange rates by preventing exychange
fluctuations of > 2.25%.
(2) UK: Labour Government by majority announced: Found satisfactory solution to budgetary
problem; Large minority opposed (resisted membership because incompatible with socialist
experiment): Labour party/its ministers allowed to campaign on either side of debate. Government
did not fully back and force its ministers to back own compromise.
• Referendum: ‘Renegotiation package’ + Stay in EEC supported by UK majority.
Margeret Thatcher pleased; Claimed success of referendum for determination of
conservative party.
BUT issue not solved, see 1979.
Second Budgetary Treaty: Amendment to the founding treaties of the Communities.
• Replaced original budgetary procedure of Communities with a new one.
• New procedure conferred important powers to the European Parliament.
• Created a new body: Court of Auditors. (Financial watchdog for Communities.)
(3) Tindemans Report (by Belgium Prime Minister Leo Tindemans).
Recognized as one of first significant statements on importance of promoting European identity.
(4) Helsinki Agreement:
• Greece + Sweden expressed their objections to Turkey’s accession.
• (Brought Human Rights into political agenda.)
1970s Leap in economic importance of OPEC (Organization of Petroleum Importing Countries). Cpould not
be contained within a fixed rate system.
International exchange rates floated free. Problems with floating international exchange rate
system. Short-term speculative fluctuations in exchange rates destabilising disincentive to trade.
1978 ECJ: Administrazione delle Finanze dello Stato v Simmenthal SpA:
• National judges must invalidate (all) provisions that conflict with EU law.
1979 (1) European Monetary System (EMS) launched.
• Most EEC countries linked their currencies to prevent large fluctuations relative to one
another.
• Elements of agreement:
a) Incuded European Currency Unit [ECU]. Replaced European Unit of Account.
• Internal accounting unit: Parallel currency.
• Exchange rate based on ECU.
• Value = Weighed average of participating currencies. (Each weighted
according to its importance intra-Union trade.)
• Used: International transactions. Official unit of account in EU finances.
Advantage: Securities in ECU’s provided investors with opportunity for
foreign diversification without reliance on a single currency.
b) Exchange Rate Mechanism ERM (I). Fixed currency exchange rate margins with
a fluctuation band of ±2.25%. Exchange rate based on ECU. But exchange rates
variable within those margins.
• System of jointly managed fixed exchange rates. / Tied floating.
Document Summary
European council summit, paris: heads of government + ministers of foreign affairs come together to make decisions in principle, formalization of previously informal european council summit meetings, to provide overriding political guide to the communities. Government did not fully back and force its ministers to back own compromise: referendum: renegotiation package" + stay in eec supported by uk majority. Margeret thatcher pleased; claimed success of referendum for determination of conservative party. Recognized as one of first significant statements on importance of promoting european identity. (4) helsinki agreement: greece + sweden expressed their objections to turkey"s accession. (brought human rights into political agenda. ) Leap in economic importance of opec (organization of petroleum importing countries). Cpould not be contained within a fixed rate system. Short-term speculative fluctuations in exchange rates destabilising disincentive to trade. Internal accounting unit: parallel currency: exchange rate based on ecu, value = weighed average of participating currencies. (each weighted according to its importance intra-union trade. , used: international transactions.
