Overview

The European Union (EU) consists of 27 Member States at the time of writing and has supranational and intergovernmental forms of cooperation. The EU has its origins in the European Coal and Steel Community (ECSC) formed by six European countries in 1951. Since then, it has grown in size through the accession of new Member States, while it has also increased its powers by the addition of new policy areas to its remit.

This chapter describes the major steps towards monetary and fi nancial integration in the European Union. In addition, it explains the most important EU institutions (European Commission, Council of the EU, European Council, the European Parliament, and the European Court of Justice) and legal instruments (like directives and regulations).

A major step in the history of European integration was the publication of the report of the Committee for the Study of Economic and Monetary Union in 1989. In this so-called Delors Report, named after the chairman of this committee, a three-phase transition towards monetary unifi cation was proposed. The main conclusions of the Delors Committee were incorporated in the 1992 Treaty on European Union and fi nally led to the introduction of the single currency as well as the European Central Bank (ECB). To protect monetary policy, the Stability and Growth Pact restricts fi scal policy of the Member States in the currency union.