NEAR EAST UNIVERSITY
INSTITUTE OF APPLIED AND SOCIAL SCIENCES
‘THE APPROPRIATENESS OF CENTRAL BANK OF NORTHERN CYPRUS TO THE EUROPEAN SYSTEM OF CENTRAL BANKS’
HAKAN TOKGÖZ Master Thesis
Supervisor: Assist. Prof. Dr. Erdal Güryay
Department of Economics
Nicosia – 2006
European System of Central Banks’
Approval of Head of the Institute
Prof. Dr. Fakhraddin Mamedov
We certify that this thesis is satisfactory for the award of a degree in Master in Economics
Examining Committee in Charge
Chairman of the Committee
Assist. Prof. Dr. Hüseyin Özdeşer Chairman, Department of Economics – NEU
Assist. Prof. Dr. Erdal Güryay Chairman, Department of Business Administration - NEU (Supervisor)
Assist. Prof. Dr. Okan Şafaklı Department of Banking & Finance - NEU
i ACKNOWLEDGEMENT
I would like to thank to Assist. Prof. Dr. Erdal Güryay for supervising me in the
preparation of this thesis and in all the studies leading to this thesis. I would also like to
thank to Assist. Prof. Dr. Hüseyin Özdeşer for all the classes he teaching us about
European Monetary Union.
ABSTRACT
The purpose of this study is to produce appropriate suggestions to increase the appropriateness of the Central Bank and the local commercial banks of Turkish Republic of North Cyprus (TRNC) to the framework of Eurosystem. This study will therefore focus on the European System of Central Banks and the single monetary policy.
"The successful development of the “euro” is core to the realisation of a Europe in which people, services, capital and goods can move freely." The history of the EURO is the largest monetary changeover the world has ever seen. The Treaty of Rome (1957)
1declared a Common European Market as a European objective with the aim of increasing economic prosperity and contributing to "an ever closer union among the peoples of Europe".Instigated by the German Chancellor Helmut Schmidt and the French President Valéry Giscard d'Estaing, the Brussels Summit of December 1978
2decided to set up a European Monetary System (EMS). It aimed to create a zone of monetary stability in Europe by reducing fluctuations between the currencies of the participating countries. It was put into operation in March 1979.The Single European Act (1986)
3and the Treaty on European Union (1992)
4have built on this introducing "Economic and Monetary Union (EMU) "and laying the foundations for"single currency."
In April 1989 the report of the Delors Committee
5envisaged the achievement of EMU in three stages:
1. The objective set for the first stage, between June 1990 and January 1992, was to step up cooperation between central banks;
2. The second stage included the establishment of a European System of Central Banks (ESCB) and the progressive transfer of decision-making on monetary policy to supranational institutions;
3. In the third stage,the national currencies would have their convergence rates irrevocably fixed and would be replaced by the European single currency.
1 www.http://en.wiki pedia.org./wiki/European_Union, Wikipedi Free Encyclopedia!s Article on European Union (22 Jun 2005)
2 http://aei.pitt.edu/archive/00001424/01/Brussels_dec_1978.pdf,The European Council [Brussels Summit 1978], Brussels, 4-5 December 1978.
3http://en.wikipedia.org./wiki/Category:European_Union, Articles in Category”European Union” (22 Jun 2005)
4 İbid
5 http://aei.pitt.edu/archive/00001007/ “Report on economic and monetary union in the European
Community”. Presented April 17, 1989 (commonly called the Delors Plan or Report)deposited 25 February 2004 (26 Jun 2005)