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The plans for Economic and Monetary Union in Europe became difficult to achieve during the period 1992-1993. The convergence criteria set up in the Maastricht Treaty block the road towards unification. It is very complex to expect twelve governments with different shades of political colour and twelve states with different economic interests to compromise in such criteria (as inflation, government borrowing, exchange rate stability and interest rates) and eventually, speak with one voice at the end of this decade. This current research provides significant modifications in The Maastricht Treaty , policy making, objectives, even changes in political behavior for better coordination to tackle any turbulence that stands on the way. These changes were unveiled and supported by outside views. The right time for transition to the monetary union depends on the rate of progress in Europe in meeting the stability requirements and in the willingness to move to a more developed political union. Monetary Union could occur late in 1990s but with a number of members left out with major dominant the Germany than the EMS.

It is now looking increasingly plausible that, at some point between the middle of 1997 and the beginning of 1999, a number of EC Member States (perhaps even a majority) will move to the final stage of Economic and Monetary Union. The macro economic consequences of EMU and the costs and benefits ofparticipating are already the subject ofactive and extensive academic analysis. Very little attention has so far been given to the question of how a two-tier EMU, with only some EC countries prticipating in Stage 3, would function and what implications there might be for those remaining in Stage 2.The purpose of this Note is to highlight some of these issues, which will need to be studied and understood in much greater depth before a decision is taken. It looks at the legal and institutional framework set out in the Maastricht Treaty, the relevant experience of nearly-fixed European exchange rates from 1987 to 1992 and the economic and political implications of particular country configurations in a two-tier EMU, concluding that mutually satisfactory management of such a relationhip will require greater political will and co-operative spirit than has been in evidence so far.