In order to understand the evolvement of the Single Market of the European Union, one has to take the general background into consideration. Therefore, it is important to have a look at the Treaty on European Union (Maastricht Treaty) which gave birth to the creation of the Single Market. Having been the Common Market before the Maastricht treaty, the European Economic Community (EEC) Treaty already clarified the objective of cooperation between member states. Throughout the Single Market, those objectives should be transformed into reality.
Addressing some issues, the European Union decided to issue 750 million Euros in order to start the process of financial stability for the whole union (Mckee 524). Over time, the union learned that that the amount of money was not enough in order to help each countries’ individual financial crisis. As of now, the union has to increase the amount of money they are feeding to countries in hopes of fixing the economic issues. The continuing issue with the European Union’s economic plans is finding the money to keep funding countries with low economic growth. Furthermore, the union also has to figure out how to deal with the issues that are outside of the European Union’s borders. In
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 . 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.
In Europe, the single currency created additional problems because of overvalued exchange rates, and high bond yields.” (Pettinger, 2013).
After the long awaited single currency implementation known as the euro, there have been many ups and downs to this monetary system. Many have been quick to criticize while others still praise its value claiming it will soon be valued strongly against the dollar. Our paper looks into the various aspects of the euro and the progress it has made since its initiation. We begin with a brief history of the euro then move on by raising some questions concerning the effects of the euro on various economic aspects such as competition and global financial institutions. We then provide insight to the various strengths and weaknesses of the euro and the implications this currency has on various institutions such as banks.
The result of the poll is not surprising because single currency policy have its own advantages and disadvantages for EU member states. The single currency policy purpose is to eliminate fluctuating exchange rates and exchange costs, create more choice and stable price for consumers and citizens, improvement of economic stability and growth, create a more integrated financial market, and encourage people to travel and shop in other countries. Nevertheless, not every member states can gain these advantages. The euro-skeptic thinks that this policy will not work and may threaten the monetary
Europe may not have the luxury of experimenting for many years before finding workable arrangements for modern economies, and of politics in the independent democracies that comprise the eurozone. Popular calls for public goods, social insurance, financial stability, and countercyclical macroeconomic policy cannot be brushed aside so easily as in the less-democratic era of the nineteenth-century classical gold standard. Furthermore, the fact that the score of the eurozone is so poor on optimal currency area grounds that it suggests a need for mechanisms allowing smoother and more symmetric adjustment between its member countries.
An introduction of the new common currency in the Europe was announced on the first day of January 1999. At the first time, there were eleven countries, which decided to join the European Union (EU) and replace their own currency with a new one, the Euro. The Euro has been adopted as a official currency of the country members including Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxemburg, Netherlands, Portugal and Spain. In order to be accepted to join the Euro, these countries had to agree with the agreement about the price stability, long-term interest rate, government budget deficits, total
The Unified monetary policy has been considered as the most impressive step into the practical Europeanisation, by which Euro citizens has not only felt the changes in daily life, but potentially internalised the positive concept that being part of EU will bring more happiness to next generations. A continuous debate between convergence and divergence within European continent had remained controversy and unresolved along with several significant agreements made due to the predicted economic advantages, including the boundary breaking-down of tariff and regulations resulting in more convenience for international transactions, and utilising single monetary for saving additional costs of currencies exchanges(Gabel and Palmer, 1995), and so
Bulgaria’s HICP inflation levels are well within the range of the eurozone average, and its budget is in surplus at 1.6 per cent, compared to the limit of 3% of deficit stipulated by the Maastricht criteria. Moreover, its debt ratio is at 29%, which is excellent when compared to the 60% peg given by the Euro requirements. The country’s bonds are showing interest rates within the 4% required as well, and most importantly perhaps, as much as Bulgaria has not yet triggered the ERM II (exchange-rate mechanism) process, it has pegged its national currency, the lev, for almost 20 years. The lev was first pegged in 1997 to the German Mark, and later in 1999 to the Euro until now, with a constant rate of 0.511494. Given such compliance, it comes to little surprise that Junker stated: “I have to say bully that Bulgaria is ready [to join the euro group]. And if Bulgaria is applying I support this heartily.”
In 1999 the single currency the ‘euro’ was introduced and some countries abolished their separate currencies, these included Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxemburg, Netherlands, Portugal and Spain. Since then another five EU countries have adopted the currency, these being: Slovenia, Cyprus, Malta, Slovakia and Estonia. Fewer barriers within the market was a fundamental part of a more integrated Europe. Member countries were struggling to keep their currencies stable relative to the European currency
Thus, the establishment of economic and monetary union and the introduction of the single currency and the ECB have become a part of an ambitious project, which, however, has never been completed due to lack of fiscal union. Also, one of the main reasons for a permanent disproportion in development is the unwillingness of Member States to transfer their own sovereign powers for creating a single supranational independent institution for the purpose of a single economic policy. In fact, the EU combines the different types of economy, which remains independent and managed by Member States. In the context of the existence of a single supranational monetary policy pursued by an independent institution - the ECB - the state, first of all, denied the so-called monetary mechanism allowing both the strengthen of the economic reforms effects, and the reducing of their imperfections. At the same time the single monetary policy is conducted without regard to differences in levels of development and in the economy structures of the euro area countries. One of the consequences of such political incoordination was the accumulation of public debt and growing fiscal deficits within the euro area, which average index has increased from 83.8 % in 2011 to 92.0% in
The exceptional nature of the euro does not mean that Europe becomes a sovereign federation or Europe’s monetary union is unsustainable in the long run. The parameters of the questions have been well stated by the head of the European Central Bank, Mario Draghi (2012), who said that “those who claim only a full federation can be sustainable set the bar too high.” However, Draghi focuses on the “minimum requirements to complete economic and monetary union.” The future of the euro depends on a key political variable: the heterogeneity costs associated with the minimum set of functions that must be pooled or delegated for a currency union to work in such a framework. Moreover, if the costs associated with heterogeneity were small, the euro area crisis of last few years could perhaps be addressed with deep fiscal and political integration.
European Monetary Union will make it possible to complete European economic integration. The introduction of a single currency will