Advantages And Disadvantages Of A Currency Union In Mexico

932 Words4 Pages
Precious Dyer
Professor Takeshi Yagihashi
ECON 305
December 2, 2014

Currency Union – Mexico
Modern day Mexico has gone though many economic difficulties from government corruption and mass immigration from the country, to inflation in currency. A country that relies heavily on the service and textile industry. As of today economic standing is very good and the country continues to grow, as of right now Mexico is the 14th largest in the world in nominal terms and the 10th largest by purchasing power. The country has sustained macroeconomics stability and moved forward in reducing inflation and interest rates and has increased per capita income in household.
The forming of a currency union also known as a monetary union is usually when two or more states or sovereign
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One way the union takes away is the independence of the country since membership of the eurozone establishes a single monetary policy, individual member states can no longer act autonomously, preventing them from printing money in order to pay back creditors and ease their risk of failure to pay. By "printing money" a country's currency is devalued relative to its (eurozone) trading partners, making its exports cheaper, in principle leading to an improved balance of trade, increased GDP and higher tax revenues in nominal terms.
There are many advantages to establishing a monetary union – especially for Mexico a new growing economic country. One advantage of creating a currency union would be an end to currency instability in the country and untimely fix the exchange rate. If Mexico was to join a union with the likes of The United States and Canada, Mexico would become more stable against any speculation than just as an individual country. Also the union would result in lower interest rates in the long run just like seen in Europe with the EU.
A North American Union like this will also force

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