The Euro And Its Impact On The U.S. Economy

1273 Words Jan 19th, 2008 6 Pages
The Euro and its Impact on the U.S. Economy The euro is the official currency of the following 12 European nations: Belgium, Germany, Greece, Spain, France, Luxembourg, Ireland, Italy, The Netherlands, Austria, Portugal, and Finland. Although it has been the official currency since January 1,1999 it became physical tender which can be used by all participating countries on January 1,2002. The introduction of the euro into the world was truly a historic event; it represented a unity never before seen in the history of Europe, a common currency. After years of negotiations and much skepticism from around the globe, the implementation of the euro is no longer an abstract ideal, but a change that nations, corporations, and investors must …show more content…
These changes will in turn make companies more competitive, expand markets for businesses, as well as increase trade across borders. However, most importantly the euro is intended to create financial market stability within the participating countries. By eliminating the movements of exchange rate and all reference to them, the European Central Bank will control interest rates and inflation. This will lead to less uncertainty and create new opportunities for success.

Global American businesses are also more likely to be successful because of the American concept of investing in Europe. Many companies compare the economic impacts of Europe as a whole instead of as single countries. "There is a very real possibility that US corporations, given their lower cost base and the tendency they have already shown to view Europe as a single market, will be the real winners from monetary union," according to a report by Price Waterhouse, the international consultancy.

Another impact the euro could have on the American economy is by effecting the exchange rate of the dollar. Although there is great potential for the euro to have a positive impact on American business, there still is much uncertainty regarding the long-term effect it will have on the dollar's role as the world's dominant currency. Federal Reserve chairman Alan Greenspan in his remarks on the euro on November 30, 2001 states that, "clearly the