Economic And Monetary Union Of The European Union

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Introduction: Since the enlightenment, Europeans have called for a stable and united Europe. Even though there have been many setbacks to a united Europe, including WWI, WWII, and the Cold War, the realization of a united Europe became a reality with the signing of the Maastricht Treaty in 1992 creating the European Union (EU). Furthermore, the progression towards a fully united Europe took another step with the introduction of the Economic and Monetary Union of the European Union (EMU), which introduced a common currency, the euro (Bordo). Both of these institutions have had an immensely positive impact on Europe, both socially and economically. Today, the European Union is considered the world’s largest economy, or second largest,…show more content…
This change, that would overcome the inherent economic flaws of the EU and EMU, is the adoption of a European Fiscal Union (EFU). The implementation of the EFU will prevent the issues that are occurring today in Europe, and ensure economic stability; thus, it will save Europe from failing.
The Flaws of the European Monetary Union and European Union: Even with the limitations inherent to the EMU and EU, they have provided great economic gains. Since the establishment of the EMU and EU, trade costs have decreased between member nations, and have given Europe the ability to compete economically with the United States, China, and other global economic superpowers (Feldstein). However, there are four major problems that the EMU and EU cannot currently address: (1) irresponsible government expenditure, (2) stabilizing economic shocks, (3) coordinating economic policy between nations, and (4) addressing debt-crises.
[1] Irresponsible Government Expenditure: A major issue faced by the nations in the EMU and EU is irresponsible government expenditure. This issue grew rapidly due to the low interest rates offered to members of the EMU after its creation. At the time, creditors believed that nations involved would either be protected from default by member nations, or become more fiscally responsible as a result of becoming a member (Feldstein). However, this did not stop countries like
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