What Are The Advantages And Disadvantages Of The European Economic Monetary Union?

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European Economic Monetary Union
Any country maintaining its currency will always have the advantage of meeting its compulsions, which are in its currency, without some limit. Besides, own currency enables a nation to be independent in terms of policy formulations. On the other hand, a nation maintaining its currency is likely to daunt its tourism sector. This is because the tourists visiting the country would have to change money while traveling from their countries, as opposed to using a universal currency, for instance within the euro zone (Grauwe, 2014). The tourists would encounter more red tape when shifting large amounts of money across borders. Besides, travelers will be forced to change currency and pay banks huge commission charges. Since the disadvantages outweigh the advantages, it is prudent for countries to form monetary unions
History of EMU and Euro
The first attempts to form a European Economic and Monetary Union started after World War I. This idea was proposed by Gustav Stresemann, on September 9, 1929, during one
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For instance, it resulted in loss of economic sovereignty. Once a country became a member of the eurozone, the National Central Banks together with the Bank of England lost their ability to utilize interest rate guidelines to achieve sovereign macroeconomic objectives (James, 2012). Due to the global recession and financial crisis, recession-hit countries such as Greece were not able to reduce interest rates unilaterally. Besides, many European countries have not been able to unite fully with the euro area due to difficulty in convergence. In the UK, for instance, convergence is not easy because of the exclusivity of its financial services sector and housing market and due to the closeness of its trade cycle to that of the USA. Besides, the UK’s labor market is extremely flexible in comparison with, France, and Spain, and this makes convergence difficult
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