The Maastricht Treaty, officially known as the Treaty on European Union
, laid the foundations for the European Union as we know it today. It was the result of several years of discussions between governments and was signed in the Dutch city of Maastricht, which lies close to the borders with Belgium and Germany. Here are five things you need to know about the Treaty.
1. It established the European Union
The Maastricht Treaty significantly increased cooperation between European countries in a number of new areas:
European citizenship: The Treaty introduced European citizenship, allowing citizens to reside in and move freely between Member States.
Common foreign and security policy: The Treaty established a common foreign and security policy with the aim of "safeguarding the common values, fundamental interests and independence of the Union".
Justice and Home Affairs: The Treaty developed close cooperation on justice and home affairs to ensure the safety and security of European citizens.
2. It was signed by 12 countries
Representatives from 12 countries signed the Treaty on 7 February 1992 – Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and the United Kingdom.
The parliaments in each country then ratified the Treaty, in some cases holding referendums. The Maastricht Treaty officially came into force on 1 November 1993 and the European Union was officially established.
Since then, a further 16 countries have joined the EU and adopted the rules set out in the Maastricht Treaty or in the treaties that followed later.
*There are now 27 EU Member States following the departure of the United Kingdom from the EU.
3. It laid the foundations for the euro
The Maastricht Treaty paved the way for the creation of a single European currency: the euro. It also established the European Central Bank (ECB) and the European System of Central Banks and describes their objectives. The main objective for the ECB is to maintain price stability, i.e. to safeguard the value of the euro.
The Treaty was the culmination of several decades of debate on increasing economic cooperation in Europe. European leaders reopened the discussion about introducing a single currency in 1986 and committed to a three-stage transition process in 1989.
The Maastricht Treaty formally established these stages:
Stage 1 (from 1 July 1990 to 31 December 1993): introduction of free movement of capital between Member States.
Stage 2 (from 1 January 1994 to 31 December 1998): increased cooperation between national central banks and the increased alignment of Member States’ economic policies.
Stage 3 (from 1 January 1999 to today): gradual introduction of the euro together with the implementation of a single monetary policy, for which the ECB is responsible.
4. It introduced the criteria that countries must meet to join the euro
The Treaty also established rules on how the euro would work in practice. This included specifying what a country needs to do to join the euro area.
The purpose of these particular rules, sometimes referred to as the Maastricht criteria or the convergence criteria, is to ensure price stability is maintained in the euro area even when new countries join the currency.
The rules work to ensure that countries joining are stable in the following areas:
Inflation: A country’s average inflation rate should not exceed the inflation rate of the three best-performing EU Member States by more than 1.5 percentage points during a one-year observation period.
Levels of public debt: A country’s annual fiscal deficit should not exceed 3% of gross domestic product (GDP) and the overall government debt should not exceed 60% of GDP.
Interest rates: A country’s long-term interest rate should not exceed that of the three best-performing Member States by more than 2 percentage points during a one-year observation period.
Exchange rate: A country has to maintain a stable exchange rate meaning that it remained within the fluctuation margins provided for by the exchange rate mechanism (ERM II) for at least the previous two years.
5. It was a giant leap forward for European integration
Since the signing of the Maastricht Treaty, European countries have grown closer together while some policy areas such as economic and fiscal policies remain at national level. European leaders have agreed on additional steps to promote further integration between European states such as:
The Stability and Growth Pact: it was agreed in 1997 to ensure that countries followed sound budgetary policies.
The European Stability Mechanism: it was established to provide financial assistance to euro area countries experiencing or threatened by severe financing problems.
The banking union: the Single Supervisory Mechanism and the Single Resolution Board were created after the financial crisis to make the European banking system safer, as well as to increase financial integration and stability.
Today, more than 440 million citizens from 27 Member States enjoy the benefits of European cooperation. In the years since the roadmap towards the euro was agreed, the euro has become the world’s second most traded currency and is part of the daily life of 340 million citizens in 19 countries.
Source: European Central Bank
Published: 15 February 2017
Updated: 1 February 2020
The above presentation was created for educational purposes.