The European Economic Community and the Euro Dollar

The European Economic Community and the Euro Dollar

The European Economic Community (EEC), also known as the common market, was established in 1957 through the treaty of Rome signed between Belgium, France, Italy, Luxembourg, the Netherlands, and Germany in order to achieve economic cooperation. "It has since worked for the free movement of labor and capital, the abolition of trusts and cartels, and the development of joint and reciprocal policies on labor, social welfare, agriculture, transport, and foreign trade." Over the years, monetary union has been suggested by the members of the EEC and was finally attained on January 1,1999 when eleven European countries, which are now collectively referred to as Euroland, introduced a single currency, the euro. Since then, the euro has invaded nearly every sector of the world economy. The monetary revolution embodied in the euro involves far more then the elimination of 11 currencies and the distributions of colorful new banknotes and coins across Europe. "It entails the solidification of the European Union's common market for goods and services, major structural changes in countries plagued by fiscal imprudence, and the reorganization of monetary policy in some of the world's most advanced industrialized economies" The risks of implementing the euro consist of supply shocks and political discord. Although the ongoing risks of maintaining Economic monetary union may hinder the stability of the euro in the long run, the integration of the euro to the EEC as of January 1999, has so far proven to have a positive affect on the European economy and has allowed it to achieve its primary political and economic goals through its four core benefits: the reduction of transaction cos...

... middle of paper ...

...ry 1, 1999 under the full leadership and support of eleven heads of state, thousands of politicians, and hundreds of prominent economists. Whether the euro's economic advantages outweigh the risks posed by economic shocks and political instability is unknown. The great gamble the EU (European Union) leaders have taken is that modern Europe is entering a new era of adaptability and flexibility that ensures the success of monetary union. So far the advantages of the EMU have come through and are showing positive signs towards the probability of a well-stabilized European economy that will benefit not only domestically but also internationally through economic stability, reform, and growth. Although its success cannot be determined until the next economic downturn, the EMU (Economic Monetary Union) is one the most exciting economic events in recent history.