What Are The Advantages And Disadvantages Of Euro In 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 European Union was initially set up as a means to terminate the conflict that occurred within Europe throughout the 20th century, culminating with the end of The Second World War (WWII) and The Cold War that followed. The EU ultimately aimed to bring the member countries together in order to form an ‘ever closer union’ between the countries of Europe, thus preventing a future battle. The Union started as the European Economic Community (EEC), which was established in 1957, and over the years endured numerous adjustments to form the politico-economic union that we know of today.

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

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.

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

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

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

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.

If white goods companies are importing or exporting goods or resources trade fees and exchange rates are important. Inside the European Union trade is free and no barriers are present. When the pound is strong businesses are able to get more for their money, this is of benefit to large companies like the white goods because not only does it encourage others abroad to invest in the country therefore increasing the strength of the pound it also encourages people to invest into companies therefore increasing revenues. Where the Euro is concerned the value of the pound is much stronger,

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 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

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

There are two main reasons for this monetary union within the EEC (European Economic Community), one being a political reason and the other an economic reason. The political arguments are that a single currency will further unite the European alliance, which was formed after WWII, by forcing Europe to act as a whole rather than as single states. This could perhaps eliminate nationalism and bring unity to this continent, which has been plagued by war twice in the last century.