Europe consists of several sovereign countries which use their own currency prior to the creation of the European Union in 1993. The EU has been built through several binding treaties and laws that harmonize European states when it comes to political issues and economic issues. It was until the Maastricht Treaty of 1999 that established a single currency known as the euro. The euro’s purpose is to have a single currency in Europe, similar to a single currency in the United States. Since Europe’s countries are closely tied together, the goal of the currency is to trade easier with one another, as well as sharing fiscal and exchange rates. Currently, there are roughly about 17 members from the EU who uses the euro as their currency and it is known that once a country joins the Union, it must quickly adopt to use the euro to enter the market for goods, services, and trade among member states. This adoption of a single currency has been the talk for a decade as well as in literature and scholarly articles. Throughout the course of this paper, it would look at two countries that refuse to adopt the euro: Sweden and the United Kingdom. The paper would answer questions that surround the euro ever since it was created, such as national identity issues of both countries, how it affects political leadership, and the economic costs and benefits of adopting the euro. Ultimately, it would answer a research topic whether the euro will overall rise or fall in Europe.
Many scholars find the adoption of euro as a mean of saving their economic growth. Others often perceive it as an easy road for facilitating trade and secure their bank’s assets. However, there are other scholars whose ideas and perceptions differ from them. Some academics and eco...
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...the economies of all other Eurozone member states are running smoothly.
The Euro has always been a political project. Politicians view the Euro as a major step towards a United States of Europe. Europe is not trying to turn itself into another country like the United States. The euro means a lot more to Europe than just money. It represents a political union from neighboring states, as well as partnership for the future. The countries who adopted the euro gave up their sovereignty and heritage to become part of the EU, which makes them more united and stronger. However, it is also not certain whether the euro will stay strong like the Japanese yen and the U.S. dollar. Both Sweden and the UK are members of the EU, but decided to opt out of the euro. Only time will tell whether these countries made the correct decision from alienating their selves out of the Eurozone.
The brutality of the World War II and the anguish of the Cold War enforced nations in Europe to establish the European Union for peace and unity in the region. With ratification of the Maastricht Treaty by members of the European Community in 1993, an economic and political union; the European Union is formed. In December 2012, the European Union awarded the Nobel Peace Prize for its “historical accomplishments”. Nevertheless, the member states of the European Union are still facing the crisis that started in the Eurozone since 2009. One of the major causes of the crisis is the common currency – the euro which has weak structural formation. The creation of a currency, the euro, is one of the major parts of the European Union. The German Chancellor Gerhard SchrÖder said in a speech in 1999 that “The introduction of the euro is probably the most important integrating step since the beginning of the unification process.”(Yeager, 30) Therefore, in this essay I would like to study the history of creation of the euro, lessons that the European Union draws from the euro crisis and analyze the future predictions of specialists about the euro. I will use the publication “Economic and monetary union and the euro” by the European Commission as the main source and other credible sources about the euro in my paper.
The European Union today is a political and economic entity that controls in a single market located mostly in Europe exploiting Euro as a single currency uniting the vast majority of its members. The market that all European Union members share provides free trade of goods and services as well as a common external tariff. One might argue that the European Union would not perceptible its current influence had it not been for the introduction of the Euro. Speaking of the benefits of the Euro, one can name the elimination of exchange rate problems, creation of a single financial market, providing price stability, low interest rates as well as being a political symbol of unity and commitment to the Union. Today, Euro is the second reserve currency in the entire world - a fact that clearly speaks for itself of its value in the global market.
Many people would agree that Europe is a continent in which regions identify with each other even if they are not part of the same country. For that reason, as well as others, in 1957 the Treaty of Rome "declared a common European market as a European objective with the aim of increasing economic prosperity and contributing to 'an ever closer union among the peoples of Europe'" (www.euro.ecb.int). Later, in 1986 and then in 1992, the Single European Act and the Treaty of European Union tried to build on the previous treaty to create a system in Europe in which one currency could eventually be used all over the land under the heading of the Economic and Monetary Union. (www.euro.ecb.int) However, the question remains, why would the leaders of various European nations want to create one currency when the rights of national sovereignty have always been an issue for countries all over the world. Why, in 1998 did they create the European Central Bank, and why in "The third stage of EMU... on 1 January 1999, when the exchange rates of the participating currencies were irrevocably set" (www.euro.ecb.int) did eleven, and later twelve, countries link themselves economically in a way that has never been done before?
To most people in the United States hearing the word Euro brings about blank stares. Ask this same question in England or another European country and it means bringing Europe together under one common currency. The Euro can be defined as the common monetary system by which the participating members of the European Community will trade. Eleven countries Germany, France, Spain, Portugal, Ireland, Austria, the Netherlands, Belgium, Luxembourg, Finland and Italy will comprise the European Economic Monetary Union that will set a side their national currency and adopt the Euro in 2002. A new National bank, based in Frankfurt Germany, will be constructed and the interest rates that control the economies of these nations will be in the hands of this new system. It is indeed a great experiment, being masterminded in Frankfurt, one that will be felt through out Europe as well as the rest of the world.1
Some would say the European Union is the modern day Soviet Union and now with the introduction of the euro, it has succeeded in what the Soviets could not dare to accomplish. How amazing that a single currency could change the fate of Europe and bring it back to a super power that it always was. In order to stand up to the influential nations of this world the European Union did the unthinkable, created the euro. While others would agree, as predicted by many financial analysts, the creation of the euro currency was one of Europe’s greatest accomplishments. The establishment of the European Union (EU) in Europe created an alliance whereby it would be greatly constructive as a nation to be strengthened economically, politically and ideologically, with a one level currency. Hence, the introduction and final association with the euro was established on January 1, 1999. This currency which was used primarily for trade and deficit diminutions was now established as the main foundational monies of all the European countries involved. Through this cooperation and attainment, the European Union gained strength in the economic frontier through consumer and business initiatives and frontiers. Basically, the EU was on the verge of bankruptcy and in order to save this great nation the euro was adopted and procured. Yet many member states did not regard the euro as their main currency, they feared the issues surrounding
4. A single currency should result in lower interest rates as all European countries would be locking into German monetary credibility. The stability pact (the main points of which were agreed at the Dublin summit of European heads of state or government in December 1996) will force EU countries into a system of fiscal responsibility which will enhance the Euro's international credibility.
The greatest fear of having monetary unification across major countries of Europe is that one country’s actions and problems
On january the 1st in 2002, 12 Europian countries adopt a new single currency, the Euro. In june 2004, the 25 EU governments agreed on the Union’s first ever written constitution. At the moment the European project looks troubled. Economically the EU is falling further behind the United States, politically the memebers are arguing about Iraq, the management of the Euro and the constitution.
As of today, there are 28 member states of the European Union. Along with five more countries that have requested acceptance into the EU, but still are waiting to hear the final verdict from the EU . The European Union has many common objectives that enable this supranational entity to fully function on a daily basis, year round. The first of which is strong economic ties to its member states. With strong economic ties in place between each member state, the EU has evolved into not only a continental market, but a massive global market. This was furthered even more with the implementation of the euro in 1999. With the introduction of the euro; trade and travel between countries became more encouraged and streamlined. As well as doing away with monetary exchange rates between countries within the EU . The euro radically changed the way citizens within member states of the European Union conducted themselves, their businesses and their lives.
The EU was also working on the monetary project, a single currency making it easier for businesses, consumers and travellers. On 1 January 2002, the euro replaced 12 currencies, which made up the ‘euro area’. This is now a major world currency alongside the US dollar and is a key advantage for countries. The Euro made it easier to work within the Common Market with no exchange rates. It was also valued higher than some currencies, which therefore increased their monetary value. This created a sense of unity among member
The euro has been in existence just long enough to generate sufficient data for a first look at its actual performance, having been introduced in January 1999. This assessment presents eight studies that use post-1999 data to provide a first look at how the euro is actually affecting trade, financial markets, macroeconomic policy-making, and Europe¡¯s economic performance.
As a result of those huge economic and social issues resulting from Eurozone crisis, finding a solution to the currency problem become an urgent as well as a crucial task of the member countries. In order to fix this problem, there were many different proposals submitted by all parties concerned. Policy implementations taken by the European Central Bank have had some powerful impacts on the economy of the union, and therefore the idea concerning a separation within the union has almost disappeared. However, to be able to find an effective and permanent solution it is needed to focus on long term fiscal and monetary policies.[1]
The EU and its single currency system referred to as the euro, is known today as one of the world’s most important currencies and is considered to be one of Europe’s most paramount achievements. The euro was launched January 1st 1999 automatically becoming the currency of more than 300 million people. From 1999 to 2002, the euro was classified as an invisible currency; merely utilized for electronic payments as well as accounting purposes. Euro notes were not habituated until January 1st 2002 when it supplanted fixed conversion rates along with the banknotes and coins of other national currencies such as the Belgian franc. The euro is now utilized by seventeen Member States of the European Union. The single currency presented irrefutable benefits for the region because it made traveling throughout Europe easier, empowered Europe on a global scale and lowered the costs of financial transactions. Prior to the euro, Europe had an established monetary system that was customarily put into place in March 1979 after the collapse of the Bretton Woods system. The European Monetary System (EMS), based a lot of concepts on fixed and adjustable exchange rates. The currencies of all the Member States, except the United Kingdom, participated in the exchange-rate mechanism (Padoa-Schioppa, Tommaso). The comprehensive and fundamental law of the (EMS) was to institute exchange rates based on central rates against the European Currency Unit, which was a weighted average of the participating currencies. Eventually over time, the EMS made strides in reducing exchange-rate variability. The economic convergence brought forth by the variability of those exchanges-rates allowed for astute currency stability within the region. Unfortunately, economi...
The creation and adoption of the Euro by the EU was a major economic decision that still affects world economies today. The currency of the Euro was first used on January 1st, 1991. This became the new currency for the EU except for the UK, Sweden and Denmark.
The first reason is the issue of euro. Considering a strong correlation between money and collective national identity, money can be used as an effective tool in facilitating the integration of diverse identities (Risse, 2003). Actually, the principal goal of the issues of euro is to promote the unification of the monetary system and foster integration of the economy in order to ease economic activities betwee...