What Are The Advantages And Disadvantages Of Introducing The Euro?

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

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.

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

This is because these stable currency countries have been given an artificially weak currency meaning that their exports are more competitive globally. As well, it has widened these countries market since most of their exports go to the countries who also use the euro, not the entire European Union's free trade places as the euro makes transactions more efficient (it eliminates the foreign exchange risk).

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

The EU has become more economically integrated by becoming a common market. This removes barriers to production, like capital and labor.

The discussion considers a brief history of globalization and, subsequently, a concise history of the institution of the Euro itself. Within the context of this history, the discussion will note that substantial evidence existing the foreshadow the forces that are now threatening to dismantle the singular monetary currency of Europe. Among those forces, the research addresses the reality that the differently scaled economies of Europe have long struggled to find common currency ground, and always with little success. The findings also suggest that an era of unbridled borrowing and budget deficit spiraling have now produced a scenario where the Eurozone appears on the brink of dismantling. Were such an event to occur,

One cannot understand the Greek Financial Crises and the general European Financial Crises without understanding the history of the European Union, the creation of the euro, and the Eurozone. The countries involved in the European Financial Crises were Spain, Portugal, Iceland, Ireland and Greece. The Maastricht Treaty created the European Union in 1993. The treaty gave citizenship to all people living in the 28 member countries. This treaty led to the creation of the Euro. In order to join the Eurozone, each member country must maintain sound fiscal policies. Essentially, each country must limit national debt to 60% of gross domestic product and limit annual budget deficits to a maximum of 3% of GDP. The main reason for the greater European Financial Crises and Greece 's crises was the country 's violated the treaty restrictions. Spain, Portugal, Iceland, Ireland and Greece were unable to maintain spending within these limits. Additionally, the European Union has a monetary union but does not have a fiscal union. Each member country maintains its own independent tax and spending policies. The absence of a common fiscal tax for every member country in the EU is the reason for the current crises.

Unanimously, both countries want to keep the Euro over going back to their old currencies, and both do not want Greece to exit the Euro. Meanwhile in Germany, Europe's economic powerhouse, Michael encounters the taxpayers who are paying most towards Greece's mammoth financial bailout while having to watch angry Athenians burning the German flag for enforcing severe austerity measures on Greece.

In 1992 the Maastricht Treaty was developed by the European Union and signed by 12 member nations to create a common Euro Zone. This Euro zone uses a single currency called the Euro, in hopes that this currency will make transactions across all member nations’ trade and exchange easier. However, no one could have imagined how big of an impact the down fall of a nation’s deficit could have on the Euro Zone, until Greece signed the Maastricht treaty in 2002. When the Greek government came on to the Euro Zone, Greece’s budget deficit and spending habits came along with it too. In order to join the Euro zone, Greece prevented the Euro zone countries from knowing its true budget deficit, inflation, interest rates, and other monetary

There are many problems facing the European Union, banking crisis, the declining in intra-European solidarity and growth crisis. Specific businesses have increased their prices in some European countries faster than the other countries, which caused the euro to become less competitive; if the euro was cracked and some countries changed to their own currency then they would be able to lower their exchange rates. This would make their goods reasonably priced for the rest of Europe.

In that stage, Union fixed the exchange rate, euro introduced as a single currency. European Monetary Institute replaced by establishment of European Central Bank.

hoped to continue a sense of safety that they fostered after the Second World War. While this appears to be a good idea, many complex issues did not receive enough attention. Now these issues are emerging and play a significant role in current policy structure, leading many to question the effectiveness of the Eurozone. What used to be a positive institution now seems controversial, and furthermore causes many leaders to stray away from further integration. Scholars such as Copelovitch, Rosato, Webber, and Hall all approach the subject in unique ways, however they all agree that the Eurozone needs severe changes in order to flourish. A lack of regulation on the market comprises most of Copelovitch’s article, as well as Hall’s article, while Rosato focuses mainly on the lack of relevance the Eurozone has with the collapse of the Soviet Union and an increase in national interests. Lastly, Webber emphasizes Germany’s powerful position in the European Union and Eurozone, and explains how these institutions rely heavily on Germany for future prosperity. Differing economies and a lapse in financial judgment are at the forefront of the euro crisis, and while the Eurozone used to be an incredible asset, it now serves as somewhat of a setback for member countries. Thus, Europe needs

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