International Business Essay

The European Union is one of the most famous Economic blocs in our recent times. It is the culmination of efforts after the devastating Second World War. It currently includes 28 states with varied cultural and historical backgrounds and even different languages. It now has more than 30 separate international trade agreements with many countries such as Colombia and South Korea (Encyclopedia of Management).

The euro completely replaced the old currencies in the member countries in January 1, 2002 but was introduced in January 1, 1999.

The choice for the European Union to adopt a single currency for the European Community was first introduced in the 1970 Werner Report. This idea was then developed into the European Monetary System (EMS). The Maastricht Treaty (1992) made EMU part of EU law and set out a plan for a single currency to be established by 1999 . It was thought that a common currency would increase efficiency in the EU, thereby raising the standard of living and develop a sense of European Identity. It was agreed that in order to adopt the single currency, EU members had to meet certain conditions. The conditions include to keep their exchange rates within bands called the Exchange Rate Mechanism (ERM), have low interest rates and low inflation and keep government spending and borrowing under control. In 1998, 11 member states had agreed to fix their exchange rates where the European Central Bank would take over and have the power to change their interest rates. The single currency is now, in 2016, is shared by 19 member states.

In 1992, twelve countries came together and signed the Maastricht Treaty creating the European Union (Krajewska, 2014, pp. 6-25). The last obstacle that the EU had to face was the different currencies of each country, therefore a decade later on January 1, 1999 the Euro was created. Many countries that adopted the new currency fell within the Euro Area. Each country had to discontinue their old currency and the monetary policies giving control the newly formed European Central Bank (ECB), but each separate country still had their own fiscal policies one of the key reasons for the current debt crisis (Krajewska, 2014, pp. 6-25). The union of multiple countries into a central body seemed to be a wise choice for greater economic growth, but the failure from one country is a failure for all.

On 1st January 1999, 11 European Nations decided to abandon their own currencies and establish a common currency named “Euro”. (Klein, 1998). At that time, Greek was the only EU Countries that are not allowed to join the euro club even though they wanted due to failure comply with the convergence criteria. However, with the help of Goldman Sachs, Greek government managed to mast their true

As the most principle stance in EU monetary architectures, the EMU has experienced an incredible institutional transformation under the tremendous pressures not matter from the EU or national levels. In Dyson’s (2000) observation, the EMU’s actual effects on European states began from 1 January 1999. However, the process for putting its conditions in place can be traced to the European Monetary System (EMS) in 1979, since when the specific

The member states of EMU (European Economic and Monetary Union) are bonded in single currency, Euro. They must have a different way of decision making in economic policies.

In 1979, European Monetary System (EMS) was launched with 8 member states. The main goals of EMS was to prepare members

Issues in relation to Euro financial crisis have been essential in generation of intriguing questions of whether the common currency will have the substantial strength and competence towards surviving and overcoming the threat. Euro zone members should focus on striving to hold things together and weather the storm with reference to recent financial challenges in association with the common currency. Eurozone continues to face diverse economic as well as financial problems. In the first instance, the region faces fiscal crisis, which has been imminent in Greece and other nations such as Ireland. In addition, the region has been facing competitiveness crisis, long evident in the large current account deficits, and larger current account imbalances between European Union. In the third instance, the region faces banking crisis, which unfolded in Ireland prior to becoming acute in Spain (Fred 3).

Beginning with the systems’ purposes, the Euro was founded in 1992 with the signing of the Maastricht Treaty. It was meant to act as a store of value and helps facilitate financial transactions across the European borders. Developed after WWII,

When the European Union was established in 1993, its goal was to create a common currency in Europe, called the euro (“Eurozone”). This goal was achieved in 1999, and the euro is now used by 17 European Union countries, including Greece (“EUR”). Greece adopted the euro in 2001, and their economy has been struggling ever since. Since joining the European Union, Greece has struggled economically, politically, and might continue to struggle in the future.

The European Union launched the economic and monetary union (EMU) of Europe on January 1st, 1999. January 1st of 2002 marked the establishment of a single currency through the introduction of euro bills and coins to 12 EU states. Formally called the “eurozone”, the movement to a single currency has developed as 18 EU member states currently use the euro. Desiring further political integration, the EMU was designed to maintain price stability through a central bank known as the European Central Bank (ECB). Although economic certainty was the goal, a financial crisis that erupted within the eurozone lead to questions about the credibility of the EMU. The debate over political integration was furthered by the introduction of ideas for increased fiscal federalism, similar to the current policies within the United States currency union. For a monetary union to succeed, a fiscal union is necessary to solve the vulnerabilities of the EMU and supervise national policy to prevent macroeconomic imbalances throughout Europe. However, the dispute over political centralization impedes the establishment of such a fiscal system within the upcoming decade.

The main advantage highlight since the Euro establishment has been the following. Firstly, smaller nations like Malta and Cyprus have been added into the EU and have seen the success brought in by Euro, in terms of increased revenue from tourism, enhancement in prices of the property, and overall financial benefits to the economy (De Santis, 2012). Secondly, European Central Bank has monitored the inflation and volatility in prices quite well, and has nearly achieved the stability of 2% inflation rate increase, that it had originally aimed for. This steadiness is also reflected in the long term interest rates that are much less volatile across the Euro zone (De Santis, 2012). Thirdly, euro has given a major boost to the European economy by increasing the market competition within the zone, with more transparency in all transactions, giving the entire zone an aura of stability. It is currently the second currency in the world that is most traded, after the US Dollar. Fourthly, on a micro-economic level, the benefits have been seen in the form

The creation of the Single European Market led to a major development in economic and political European integration. It is managed by the European Central Bank (ECB) and currently the Euro is used in nineteen EU states. The ECB monitors and regulates the European Union’s interest rates. Risks associated with exchange rates disappeared, and the costs are reduced in comparison to individual state currencies. Individuals travelling throughout the Eurozone only need to carry one currency. Not all EU member states share the Euro, states have a free will and may choose whether to adopt the currency or not. Countries can be members of the European Union without sharing the single currency of the Eurozone. Being united by one currency brings political and economic stability to the EU’s member states. The Euro creates a larger economy as well as a homogenous market where states are able to co operate towards one common goal.

The global financial crisis has found problems of the world economy and identified disadvantages in the current monetary system. Status of the US dollar as key currency has been challenged and nowadays there is a discussion of how new system should be looked like. Economists, policymakers and non-governmental organizations have made new suggestions. The paper provides an overview of some proposals that were offered.