The Euro: Advantages and Disadvantages

Breitfelder, M. (1998). The Euro Currency Age: Challenges and Opportunities for U.S. Businesses. Business America, 119 (7), 33.

What the Euro experience has taught us is that even countries which are not vastly different from each other in terms of economic health, can face a phenomenal crisis within just 10 years of the creation of the single union. How then would you expect a global currency encompassing countries with vastly different structures, in vastly different stages of growth and using vastly different means of managing their economies to be stable?

As of 2012, only seventeen of members of the European Union have decided to use Euros as their currency. In order for the members that adopted the Euro as their currency to successfully help their economic problems, the Eurozone members had to follow strict instructions put into place the European Union. The strict policies included strict control over inflation, government debt, and long-term interest rates (Mckee 525). The union put these strict policies into place to give the union the tools that it needed to take in order to help fix the economic crisis in each country participating in the Eurozone. Without the full cooperation of each country, it could cause the plans to fix the economic crisis within each country to fail because of the different interests by each individual country.

In Europe, the single currency created additional problems because of overvalued exchange rates, and high bond yields.” (Pettinger, 2013).

The Euro was approved for equity and debt trading, bank transactions, business-to-business and payments by cheque. The euro transformed Europe (Warner, 1998) from “a jigsaw of costly protected markets into a vigorously competitive economic bloc, thereby enhancing international trade in the area”.

In this essay, I will be discussing why and how the European Union was set up and the advantages and disadvantages of membership in its historical context.

The discussion considers a brief history of globalization and, subsequently, a concise history of the institution of the Euro itself. Within the context of this history, the discussion will note that substantial evidence existing the foreshadow the forces that are now threatening to dismantle the singular monetary currency of Europe. Among those forces, the research addresses the reality that the differently scaled economies of Europe have long struggled to find common currency ground, and always with little success. The findings also suggest that an era of unbridled borrowing and budget deficit spiraling have now produced a scenario where the Eurozone appears on the brink of dismantling. Were such an event to occur,

With the impending Presidential election consuming the American news cycle, major media outlets and the general public alike have neglected a growing crisis within one of the world's most important centers of commerce and culture. Despite the domestic rancor over stimulus packages, runaway debt and rampant unemployment which has inspired fierce political debate here in America, the fact remains that many European countries have borne the brunt of the global recession currently decimating national economies. The so called Euro Zone, a consortium of 17 neighboring nations which belong to the European Union (EU) and have adopted the Euro as their common currency, has experienced unimaginable financial disarray during the last decade. In the modern age of globalized economic structures, the increasing instability emanating from European markets is now threatening to spread to Asia, America and around the world.

In this essay I am going to discuss and evaluate whether or not I think that the UK government should join the euro and the advantages and disadvantages of being in the Eurozone. Additionally, I will be discussing and evaluating the exchange rate theory, the UK’s entry and withdrawal of Exchange Rate Mechanism (ERM 1) and which elements are included in the European Monetary System (EMS).

Q5b) From the perspective of the citizens, devaluing the currency would be disastrous as the citizens assets are in that currency, as well as their life savings. For example, in Iraq, when the currency collapsed, people’s savings were

This essay is divided into several sections. The first section deals with defining what exactly the author means by ‘World Reserve Currency’ and ‘Dominant Currency’ – because without underlying this, the issue becomes vague and ambiguous. The second section seeks to answer the factors affecting currency compositions of reserves across the world – and will briefly argue why the USD (and not the Yuan or any other currency) continues to fit the bill as the perfect reserve currency. It is followed by section three which asks why the tag of “World Reserve Currency” is so important – and also answers why the

for what the ECB is doing, because its behaviour and its decisions are not only affecting

The Euro can be determined as the official currency of the Eurozone. In this context, it includes 19 member states of EU. It was in the year 1998 when European leaders agreed on introducing 11 countries to the euro. There are many benefits that countries get with single currency. It includes the cost related to changing currencies which is eliminated. Further, there is price transparency and eliminates exchange rate uncertainty. On the other hand, there are disadvantages that includes transition cost, single policy effects other countries.

Throughout history, economic crises have emerged continuously. According to the International Monetary Fund, in the four decades between 1970 and 2010, there were no fewer than 145 banking crises, 208 monetary crashes, and 72 sovereign debt crises. This adds up to a total of 425 systemic crises across the world (Lietaer 3). These crises are caused because of the way the world monetary system has been set up. With debt being the basics of the current monetary system many local communities have developed new systems to replace or to help stabilize the current fiat currency system. These alternative forms of currencies are usually on a smaller, local scale to help the community balance the unstable

Immigration of refugees into other economies has been an issue in the affected countries that play a vital role in the harboring of refugees. It goes without saying that the influx of refugees comes with some standing effects that may influence the financial system of the recipient countries positively or negatively. Having been an issue for some time European economies are affected by the influx of immigrants. The resulting effects are quite varied and influence some spheres in the economics scale mainly on how the influx of refugees impact the public finances, how the refugees affect the labor markets and what effects it has on healthcare systems. This paper focuses on the diverse effects of the refugees on the European economies at large.