The Economic and Monetary Union (EMU), whose rules, institutions and objectives are defined by the Treaty on the European Union signed at Maastricht in 1992, corresponds to the economic zone in which the single currency (the Euro) is now in operation. It is based on two institutional cornerstones: the Ecofin Council of the EU’s economic and financial ministers and the European Central Bank (ECB). The 12 countries participating in EMU are obliged to respect the convergence criteria fixed at Maastricht for entry into the Single Currency (inflation, public deficit, exchange rates and convergence rates), and in 1997 adopted the Growth and Stability Pact, i.e. the agreement by which all the member states pledge to observe rigorous fiscal and budgetary disciplines. The Pact is based on an essential aspect: an early warning system to identify and correct real or estimated budgetary difficulties and thus prevent them from generating a public deficit higher than 3% of GDP. In the event of a state effectively incurring a violation of the Pact, it then becomes liable to sanctions, with the obligation to establish a non-interest deposit equivalent to 0.5% of GDP. If, at the expiry of two years, the deficit still exceeds 3% of GDP, the sanction is then converted into a fine and the deposit confiscated by the Union.
