The Euro Essays

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

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.

The euro is not the currency of all EU Member States. Two countries (Denmark and the United Kingdom) have ‘opt-out’ sections in the Treaty excusing them from involvement, while the rest (numerous of the more recently agreed EU members plus Sweden) have yet to meet the situations for approving the single currency.

The EU sought to simplify trade within European neighbors and to replace national currencies with a single shared currency that could compete with the dollar on the global stage. The members of the newly-formed European Union agreed to a fixed currency conversion rate when the Euro was adopted (Scheller). Initially, the EU only had 11 members, but membership has since grown to 25 member nations. These 25 member countries operate within what is called the Eurozone, over which the European Central Bank sets economic policy

Whether the United Kingdom decides to join the European single currency and replace the pound with the euro will have profound economic as well as political effects on the country so is a very important decision and has considerable variations in attitudes towards the topic, although the British public opinion has consistently opposed joining the euro. The euro is currency shared by 18 of the European Union's Member States. The euro was introduced in 1999 and automatically became the new official currency of 11 States, followed by another 7 countries joining to date. However, the UK negotiated an opt-out to from the Treaty meaning they don’t have to adopt the common currency as they fit a certain criteria [1]. Joining the European single currency can have major advantages for the UK, such as diminished uncertainty of exchange rate for businesses and the decreased need to pay transaction costs of changing currencies when abroad. It can also have disadvantages such as loss of domestic monetary policy and variable rate debt in the UK.

The euro (€) is the official currency of the Eurozone, which consists of 17 EU member states using this currency. The euro is also the 2nd largest reserve currency as well as the 2nd most traded currency in the world after the United States dollar. As of November 2013, with more than €951 billion in circulation, the euro has the highest combined value of banknotes and coins in circulation in the world, having surpassed the U.S. dollar.

The euro is the currency that is used by these European Union countries: Belgium, Greece, Cyprus, Spain, Germany, Italy, Ireland, Malta, Austria, Luxembourg, Finland, Portugal, the Netherlands, Slovenia, and France.

Prior to the introduction of the Euro there was a lot of debating to what extend the Euro could function in the Eurozone. Some of the criticism came from the OCA theory where it was argued that the euro zone was not an optimal currency area because of the regional disparities among the member states. A monetary policy that might be right for Germany and the Netherlands might not be as beneficial for countries like Spain and Italy. Other criticism originates from the period of the European Exchange Rate Mechanism (ERM). Before the Euro was introduced the Bundesbank had been running German monetary policy and because it was effective in maintaining low inflation rates, other countries were pegging their currencies to the Deutsche mark as well as they could. Therefore, a major concern also was on the

If the Eurozone were to break up, whether partially or completely, it would send the rest of the world into panic and economic turmoil. The countries departing the euro would have to revert back to its old currency and as such face a significant devaluation. Thus people who have their savings in these countries would see a significant fall in value of their savings. In order to prevent this from

The Eurozone is the economic region formed by those member countries of the European Union that have adopted the euro. (Perry, S. 1994).

Adoption of the Euro is directly related to the idea of the Economic and Monetary Union (EMU), which is a single, highly integrated economic market. The EMU was created in 1992 through the Maastricht Treaty in order to create the single market with a single currency, the Euro, and the EMU is defined by close economic policy creation between the members who fit the criteria. In order to join the EMU and adopt the Euro, a country must meet stringent economic requirements demonstrating its stability, including a low inflation rate, good exchange rate policies, and general fiscal rectitude. The European Central Bank manages the EMU and the Euro, and while member states have their own fiscal policy independence, member states of the Eurozone agree to set of best practices for fiscal policy under the Stability and Growth Pact. The success of the EMU hinges on coordination of policies and ideas between its member states. While the European Union states that the Eurozone is beneficial due to its unified market and currency policy guaranteed by stringent controls and stability from the European Central Bank, the Eurozone crisis of 2009 proved to be distatrous in both Europe and globally.

The main purpose of introducing the Euro is to help the poorer European countries to catch up to their richer counterparts.

In 1999 seventeen countries in the European Union adopted the Euro forming a Euro Area. With the adoption of the Euro these seventeen countries discontinued their old currencies and monetary policies. Monetary Policies

The European Union (EU) was established in order to prevent the horrors of modern warfare, experienced by most of Europe during the World Wars of the 20th century, from ever ensuing again, by aiming to create an environment of trust with the countries of Europe cooperating in areas such as commerce, research and trade (Adams, 2001). The EU has evolved into an economic, trade, political and monetary alliance between twenty-eight European Member States. While not all Member States are in monetary union (i.e. share the currency of the euro), those that are form the ‘Euro-zone’ (Dinan, 2006). The EU can pass a number of types of legislation, with a regulation, act, or law, being the most powerful. Its ‘tricameral’ (European Union, 2007)