Free movement of capital in the context of the implementation of monetary policy in EMU and the European Union

• Author: MajlindaTafaj Ilirjana Kucana
• Position: University of Tirana, Albania - Mediterranean University, Albania
• Pages: 246-254

IIPCCL Publishing, Tirana-Albania

Academic Journal of Business, Administration, Law and Social Sciences Vol. 1 No. 3

November 2015

ISSN 2410-3918

Acces online at www.iipccl.org

246

Free movement of capital in the context of the implementation of monetary

policy in EMU and the European Union

PhD (C.)MajlindaTafaj

University of Tirana, Albania

Ilirjana Kucana

Mediterranean University, Albania

Abstract

Free movement of capital has been one of the main objectives of Article 3 of the EC Treaty, as

part of the development of the common market. Nowadays, the domestic market and almost all

of other freedoms (eg. workers, goods and services) depends on the freedom of movement of

capital. Unlike other freedoms, freedom of movement is more liberalized. European investment,

cross-border transfers, bank accounts, purchases and authorization of purchases of real estate,

inheritance etc., are included in the free movement of capital. Free movement of capital has lost

somehow its sense with the entry into force of EMU and the introduction of the Euro.

This liberalization aimed at realizing a collaboration and coordination of economic policies

and to some extent even political at the higher levels of the central banks where the fulfillment

of the convergence criteria (four criteria), was a prerequisite for a country to adopt the single

currency. But EMU and its implementation in the third phase brought significant consequences

with regard to the institutional, economic and monetary policy having an impact directly on

the free movement of capital in the EU, which will be the object of analysis in this paper.

Keywords: Free movement of capital, Euro, monetary liberalization, the Economic Monetary

Union, the European Court of Justice.

Introduction

The principle of free movement of capital had been established in the Treaty of Rome.

This was a principle that would take matters in subsequent periods by returning to

the fourth most important basic freedom. The creation of the common market and

furthermore of a European single market, can not be conceived without the fulfillment

of a fundamental freedom such as that of circulating capital. This is one of the

fundamental freedoms of its four operating a joint union like the European Union;

furthermore it is directly related to the realization of Economic and Monetary Union.

European dream can not be complete if the free movement of capital is not liberalized

among other freedoms (eg. persons, goods and services). It would be impossible to

carry out those freedoms without the possible transfer from one member state to

another of workers payments, the prices of goods and services, investments and cross-

border transfers (Cyril, 2010, 217).

The Treaty of Rome had not sanctioned any formal obligation to liberalize capital

movements. Article 67 of the treaty is about determination of the measures necessary

for the normal functioning of the internal market. The following years did not bring any