The European Monetary Union Essay

Out of the 28 members of the EU, there is ought to be a country with a weaker economy. Based off of Nauro F. Campos, Fabrizio and Luigi Moretti’s research, countries that recently joined (2004) the EU like Portugal, Czech Republic and Hungary now has an economy much higher than their synthetic GDP. Which is the predicted GDP if they didn’t join the EU (Doc B). This information proves that the EU does actually work economically as countries in the organization by improving their economy and supporting them. Another example of this economic growth is Poland. According to Mitchell A. Orenstein, the Polish economy had been growing “rapidly” for 20 years. At more than 4% a year. He also stated that some German industries are able to produce goods in Poland for cheaper than China. These examples show how the EU is able to support its members economically and still benefit the stronger members at the same time. Benefiting both sides brings peace in between the countries, which brings me to this last

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.

The European Union (EU) is a unique economic and political partnership between 28 different countries. It consists of about half a billion citizens, and its combined economy represents about 20 percent of the world’s total economy (Briney, 2015). Today The European Union works as a single market, with free movement of people, goods and services from one country to another. There is a standard system of laws to be followed, and since 1999 many countries share a single currency called the Euro (Europa.eu, 2015). This essay will explore the background history of the European Union and the benefits and drawbacks of the European Union.

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.

have to agree on one issue. There is also a financial cost of being a

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.

When considering joining the European Union, countries think about how they will benefit and one way they can benefit, is through the economy. First of all, there is a common currency, the euro. This makes moving from country to country easier, as well as giving nations in the European Union a feeling of unity. Europeans can move freely within Europe and do not have to worry about exchanging currency. Having the euro is also beneficial because it eliminates trade barriers, by having the same currency, it will be easier to trade. There will be no need for conversions when trading throughout the European Union. Also, the free trade area is beneficial

The economic advantages that participating member states enjoy over non-participating members are low inflation (due to its stability), more price transparency (consumers can compare prices more easily), less currency exchange costs, a more powerful global voice, protection from external economic shocks (ex. an unexpected rise in oil prices), easier travelling within the European Union, and more international trade (the low currency value increases the competitiveness of these countries' exports and this currency has a higher total stability).

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

A question reviewed on numerous occasions, weather the UK should join the Eurozone, considering what a currency union intakes, the benefits and costs, a judgment can be entailed weather the Eurozone would be a valid investment for an economy such as the UK. Exchange rate, capital risk, interest rates or any monetary policy and fiscal policies, shall be taken in to account when formation a judgment to weather the UK should become a member of the Eurozone. The heart of this case is revolved around interest rates and to whether it shall cause a great impact on the financial sector of the economy, as the UK largest revenue resource is from there banking sector.

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

The European Union is not perfect. It has its own weaknesses and faults as well. Therefore, now I would like to write a short description about the mistakes of the monetary union. Then I put a question to all of us if the Eurozone, and especially the Euro, need to be reformed after the last years experiences. Finally – at the end of this subsection – I briefly summarize the negative effects of the crisis on the EU as a single currency area.

Eradication of the expenses of converting currencies: for every personality and the organisation there is certain amount of charge to be paid while converting between the currencies. A single currency will help in elimination of such expenses.

The single currency makes international trade easier as there is more transparency of prices when there are less currencies to convert between to see where offers the best deal. Buyers from different countries can easily see where they will get the best bargain from because all the prices will be in euro and they won’t have to worry about converting prices.

The European Monetary Union is distinguished by a general monetary policy and in the same time, also by twelve national fiscal policies from the member states. The European Monetary Union is unique and different in term of operating mechanism as it lacks a central fiscal authority. The intention of the absence of a central fiscal authority is to establish a similar construction of the organisation, with a fiscal decentralization (Furceri, 2004). Analysts contend that the carefully management of the European Monetary Union will boost a positive relationship between the free trade of the member states and the monetary system itself, since, the monetary system will be able to reduce the cost of transportation transaction, stabilizing the society