EMU (European Monetary Union)

EMU started in 1999 and the abbreviation stands for the European Monetary Union. EMU is a monetary zone with a common currency, the euro.

EMU has its own central bank that control interest rates for all countries participating in the European Monetary Union. Virtually all EU countries are also participating in the EMU system but not England, Sweden and Denmark. EMU is a improvement of previous systems with fixed currency exchange rates, in that all countries in the system have the same currency.

EMU has learned from history and has strict requirements for permissible inflation, fiscal finances and interest rates. If not all countries adhere to the requirements set in the EMU there is a risk of a system collapse.