Lecture 4Birth of the Euro欧元诞生Stage 1 DictationYou will hear a list of words and expressions that will appear in the incoming lecture. Please write them down in the space provided below.1) legal tender2) stabilize3) fluctuation4) unit of accounting5) Maastricht Treaty6) budget deficit7) national debt8) peg9) invoicing10) traveler’s check11) mint12) price transparency13) investment fund14) fragmented15) liquid16) flaw17) inherent18) boast19) treasury20) European sovereign debt crisisStage 2 Listening ComprehensionNow, you will listen to a lecture on Birth of the Euro two times. This lecture is delivered at a fairly slow speed. As you listen, find answers to the following questions:1.Who are the members of the Eurozone?They are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Greece, Slovenia, Cyprus, Malta, Slovakia, and Estonia, Latvia, and Lithuania.2.What was the goal of the Treaty of Rome?It was to create a common market in Europe in order to increase economic prosperity and contribute towards an ever closer union among the peoples of Europe.3.What happened in 1979?The European Monetary System was established and the European Currency Unit (ECU) was created.4.When the euro was first introduced, what did the Eurozone countries do?They officially pegged their exchange rates to the euro and began to use it in non-cash transactions and accounting.5.How does the euro enable the Eurozone market to function more efficiently andgrow more steadily?Through price transparency, elimination of exchange rate fluctuations, elimination of various transaction costs, enhanced competition, and more attractive opportunities for foreign investors.6.Why is the euro accused as “an incomplete currency”?According to George Soros, the euro is an incomplete currency, for the Eurozone “established a monetary union without a political union.” T he European Central Bank was created but a common treasury was not in place. Because a sovereign banking system is missing from the design, “the euro has become the focal point of the current [European sovereign debt] crisis.”Stage 3 Guided Note-takingIn this stage you are guided to take notes on the lecture. As you listen, try to complete the spaces left for notes. In order to speed up your note-taking, use symbols and abbreviations wherever possible.Lecture Script:Birth of the EuroOn January 1, 1999, the world witnessed one of the most profound and far-reaching economic events of modern history: the euro was born. As you may know, the euro is the common currency and sole legal tender of the Eurozone, also known as Euro Area or Euroland. Currently, the Eurozone has a population of over 330 million, larger than that of the United States. The founding members of the Eurozone are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Later, Greece joined in 2001, Slovenia in 2007, both Cyprus and Malta in 2008, Slovakia in 2009, Estonia in 2011, Latvia in 2014, and Lithuania in 2015.But the euro didn’t come overnight. As a matter of fact, the euro has walked a long way to get to where it is now. To give you an idea of what the euro has gone through, I begin with the early efforts made by Europe after World War II.In 1951, in order to promote European economic cooperation, Belgium, France, West Germany, Italy, Luxembourg and the Netherlands signed the Paris Treaty to create the European Coal and Steel Community. Then in 1957, these countries entered into the Treaty of Rome, establishing the European Economic Community (EEC). Their objective was for Europe to create a “common market” to increase economic prosperity and contribute towards “an ever closer union among the peoples of Europe”. However, the Treaty of Rome made no mention of an economic and monetary union and a single currency.It was not until two decades later that the movement toward a common currency accelerated. In 1979, the European Monetary System took effect in an attempt to stabilize inflation and stop large exchange-rate fluctuations among European countries. This system led to the creation of a currency unit called ECU. You may wonder: what is ECU? ECU stands forEuropean Currency Unit, which was a basket of the currencies of the EEC member states. But the ECU was not an actual currency. It was developed by the members as a unit of accounting; that is to say, it was an artificial currency initiated for their internal accounting purposes.In 1992, a more ambitious move was taken. The members of the European Community signed the Maastricht Treaty, setting a deadline of January 1999 for a shared currency. The treaty created the European Union (EU) of 12 countries on November 1, 1993 and laid the groundwork for shared economic and monetary policies. In order to participate in the new currency, member states had to meet strict criteria, such as a budget deficit of less than 3% of their GDP, a debt ratio of less than 60% of GDP, low inflation, and interest rates close to the EU average.Through the 1990s, the necessary financial institutions were put in place. For example, the European Central Bank (ECB), headquartered in Frankfurt, Germany, was set up in 1998. The ECB was to be responsible for setting a single monetary policy and interest rate for the adopting nations.Then, on January 1, 1999, the euro was introduced to world financial markets, replacing ECU at a ratio of 1:1. The 11 Eurozone countries officially pegged their exchange rates to the euro and began to use it in non-cash transactions and accounting. Companies started using the euro for internal reporting, invoicing and issuing bonds. Stocks began trading in euros. Banks started to offer euro credit-card accounts. People were able to pay mortgages and use t raveler’s checks in euros, too.However, for quite some time, both the euro and the national currencies of the Eurozone countries coexisted, and the euro existed only in the form of cashless payments such as checks, transfers, and bank cards. It was not until January 1, 2002 that euro banknotes and coins entered circulation. During the first two months of 2002, the national currencies of the member countries were completely replaced by the euro. In preparation of the euro paper money and coins, 15 billion pieces of paper money were produced and 50 billion coins were minted.Since the introduction of the euro, there have been a number of clear benefits to the Eurozone citizens. In the first place, people can travel more easily both within and outside the euro area because they don’t need to change currencies every time they cross a border. Secondly, the single currency allows the European Union’s single market to function more efficiently and grow more steadily through price transparency, elimination of exchange rate fluctuations, elimination of various transaction costs, enhanced competition, and more attractive opportunities for foreign investors. Thirdly, a single currency zone opens up huge opportunities for both savers and borrowers. For one thing, the euro helps provide a single market for financial operators such as banks, insurers and investment funds; for another, small and fragmented national capital markets evolve into a larger, deeper and more liquid financial market. As a result, savers are offered wider and more diversified investment and saving opportunities, while borrowers can raise money more easily on capital markets. However, critics argue that the euro has inherent flaws. George Soros, a well-known investor, claims and I quote, “The eur o is an incomplete currency to start with. In 1992, Maastricht Treaty established a monetary union without a political union. The euro boasts a common central bank but it lacks a common treasury. It is exactly that sovereign banking that financialmarkets are now questioning and that is missing from the design. That is why the euro has become the focal point of the current [European sovereign debt] crisis.” End quote. Nevertheless, the euro has become one of the four major world currencies, along with the U.S. dollar, the British pound, and the Japanese yen. So, good-bye marks, good-bye francs, good-bye lira, good-bye guilder, good-bye peso, and good-bye so forth.Note-taking Model:Topic: Birth of the Euro1/1/1999 € = sole leg. tender - €zone/area/land w/ pop. +330 m. > USA-founders: Aus. Bel. Fin. Fr. Germ. Ir. It. Lux. Net. Port. + Sp.-Gr. (2001), Slon. (07), Cyp. & Mal. (08), Slok. (09), Est (11)-Latv. (14) & Lith. (15)1951 - prom. Eur. econ. coop – Bel. Fr. WG. It. + Lux. signed Paris Treaty- ECSC created1957 - T/ Rome → EEC- obj. → com. mkt. - ↑ econ. prosp.→ closer u. – Eur. peop.- b. no econ. & mon. u. / single cur.1979 - EMS → stab. infl. & stop FX fluct.- ECU = basket of cur. – EEC memb.= unit of acctg. (artif. cur.)1992 - Maastricht T. – deadline (1/1999) for sh. cur.– EU (12 cos.) – 11/1/1993–grwk. – sh. econ. + mon. pol.–Criteria: 1) budg. def. < 3% GDP2) debt ratio < 60% GDP3) low infl.4) i. r. ≈ EU avg.1998 - ECB – Frkfurt. Germ. – resp.: set single mon. pol. + i.r. – memb.1/1/1999 - € repl. ECU – 1:1-€zone cos. peg. exch. r. - € - noncash trans. + acctg.-€ - int. rep., invoicing, iss. bond, tr. st., cr.-c. a/c, mortg., trav. check(cashless)1/1/2002 - € bknts. + coinsFeb. 2002 - nat. cur. repl. ← € (15 b n. paper notes + 50 bn. coins)benefits 1. trav.easily w/i + outside €area ∵no $ change2. single mkt. func. eff. & gr. stead. ← pr. transp., no FX fluct., no trans.costs, enh. comp. + attr. opp.3. opp. → savers + investors∵single mkt. = larger, deeper + more liq.- saver: diversif. invt. + svg. opp.- borrower: raise $ easily – cap. mkt.flaws - inherent-G. Soros: “…incomplete…; Maastr. T. …mon. u. w/t pol. u. …common c.b. but …lacks … com. treasury. …s overeign bkg.… ismissing…That’s why € = focal point …current ESD crisis.”major wld. cur. - US$, £, ¥, €bye → DM, fr. lira, guilder, peso, etc.Stage 5 Testing 1: Multiple-Choice QuestionsNow you will hear 10 questions about the information you heard in the lecture. Each question will be spoken two times, but it will not be written out for you. You must listen very carefully to each question. After hearing a question, you must read the four possible answer choices provided. You will then refer to your notes and select (a), (b), (c) or (d) – whichever is the best choice.1.When did Malta join the Eurozone? (b)2.Which of the following groups are the founders of the European Coal and SteelCommunity? (a)3.Which of the following descriptions is a characteristic of the ECU? (c)4.When was the European Union established? (b)5.What are the requirements for becoming a member of the Eurozone? (d)6.Where is the European Central Bank located? (a)7.How was the euro used between January 1999 and January 2002? (d)8.How many euro banknotes and coins were produced in order to replace the nationalcurrencies of the member countries in 2002? (b)9.Why is the Eurozone able to offer more opportunities to both savers and investors? (a)10.Which of the following was the original currency unit of the Netherlands? (c)Stage 5 Testing 2: True-False StatementsIn this part of the test, you will read ten statements about the information presented in the lecture. First read the statement carefully. Then check your notes to decide whether the statement is true or false. If it is true, write a T in the blank space before the statement; if it is false, write an F in the blank.1 (T);2 (F);3 (F);4 (T);5 (F);6 (T);7 (F);8 (T);9 (F); 10 (T)Stage 7 Expanded ReadingIn this stage you are expected to broaden your horizon into the topic of the lecture. Please read the following article carefully.参考译文：欧元危机与零售业2008年9月15日，美国投行巨头雷曼兄弟破产，引发了全球金融危机。