The plan for EMU was approved as part of the Maastricht Treaty, which was signed in February 1992 and entered into effect on 1 November 1993. The treaty provides for transition into EMU in three stages.
Stage 1
Stage 1 began at the start of July 1990, by which time nearly all barriers to capital flows had been abolished within the EC.
Stage 2
Stage 2 began at the start of 1994. Cooperation between the Member States in respect of economic and monetary policy was intensified and the necessary preparations were made for the launch of stage 3.
The European Monetary Institute (EMI) was also established at the start of Stage 2.
The countries participating in EMU as from 1 January 1999 were chosen on 2 May 1998.
The European Central Bank (ECB) was established on 1 June 1998. The EMI was dissolved.
Stage 3
At the start of Stage 3 on 1 January 1999, the conversion rates between the currencies of the countries participating in the euro area were irrevocably fixed. The euro was adopted as the single currency of the euro area countries.
With the onset of Stage 3, there was a fundamental change in the position of the participating countries' central banks. National monetary policies were replaced by the single monetary policy of the Eurosystem. The national central banks can influence decision-making through the Governing Council of the ECB.
EU Member States that are not participating in the euro area may join Stage 3 of EMU later, after they fulfil the prescribed convergence criteria. These criteria are related to price level, general government budget balance and indebtedness, exchange rates, and level of interest rates.