Macroeconomic flaws in the Euro Essay

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Fundamental Macroeconomic Flaws in the Euro

Five years ago, the biggest thing in economic and international news was the introduction of the new European currency, the Euro, into circulation and into the pockets of the consumers of the participating countries within the European Monetary Union. In an attempt to unite Europe and to form a dominant currency to rival the US dollar, Europe locked their exchange rates and went full steam with this plan. Unfortunately, for many of the European countries, what seemed to be the end all for European economics, quickly unraveled the inherent reality of the fundamental macroeconomic flaws in the European monetary system that may cause its downfall and deficit policy that could lead to its utter
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“It [Warren plan] stressed the need to move forward simultaneously in coordinating policy, and in narrowing exchange rate margins, the integration of capital markets and the establishment of a common currency and a single central bank”(Urwin )

Even though this movement was so ahead of it’s time, it created the vision of a united Europe and set the foundation for other EU developments toward European integration. The EMS was not as ambitious or as idealistic as the previous warren plan was, but rather it was more of a realistic set plan that laid out how to go about the long road toward integration. The EU moved closer and closer throughout the 1980’s and the 1990’s as many more agreements and treaties were introduced and signed.

Finally, five decades after the end of the WWII, Europe was in the final stage of essentially accomplishing the “unacomplishalble”. On January 1, 1999 the European Union and its 11 pioneering nations composed of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal, and Spain accepted the Euro as their new currency.

There is no doubt that the major players within the European Union had good intentions and brilliant, idealistic, plans for the Euro and for the uniting of Europe. The Euro was not just thrown together in a day, it has been worked on since the 70’s and to say it was poorly thought out wouldn’t really fit the
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