Discuss the Economic Advantages and Disadvantages to the Uk of Participation in the

2629 WordsNov 1, 200911 Pages
Discuss the economic advantages and disadvantages to the UK of participation in the European single currency (Euro). Will British businesses be better or worse off if the country decides to participate? Introduction of Euro in the world’s monetary union is a milestone. Eleven countries were going to create EMU at the beginning, now there is a long queue to join in EMU. Most of the EMU members get more advantage then disadvantage to join in Euro. Euro creates a large market in the Eurozone. Three core members of EU (Great Britain, Sweden and Denmark) still not participate in European single currency. Many European countries are very excited to join in EU, some of them decided to implement European rate mechanism- 2 (ERM-2). If Britain…show more content…
Enhanced coordination from different countries in the economic and monetary policy. Phase 2: European Monetary Institute (EMI) established. EMI monitored macroeconomic convergence of members according to Maastricht treaty. In that stage, commission prepared logistic and organisation framework for ECB. Phase 3: In that stage, Union fixed the exchange rate, euro introduced as a single currency. European Monetary Institute replaced by establishment of European Central Bank. Advantage of Single Currency Several advantages deserves, if one country join in to the single currency such as eliminating transaction cost, avoid exchange rate uncertainty, increase transparency of price, increase credibility of monetary union. All the member of European Union gets equal opportunity and benefits. The countries get benefit in the case of converting currencies. Every European Countries have separate currency. When anyone converting the currency of any European country in to another European country’s currency then the converting cost added each time. If we used single currency, we can easily minimize the converting cost. According to Solman and Sutcliffe (2004, p.742) “the European commission estimated that the effect was to increase the GDP of the countries concerned by an average of only 0.4 percent”. United state of America whose have 51 states with one single currency. They get benefit of single currency in their market. Euro currency gives the
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