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America and the Euro
America’s relationship with Europe has long been the cornerstone of our economic and foreign policy. Today, America’s fortunes remain fundamentally linked with Europe’s. Needless to say, we have a security interest in what happens in Europe, but we also have a vital economic stake. Together, the United States and the EU produce close to half of all goods and services in the world and account for over half of all world trade. While we put great attention on emerging markets throughout the world, one cannot overstate the importance of our commercial relationship. The EU is by far our largest commercial partner. The annual value of U.S. and EU trade exceeds $250 billion. Europe is twice as large a market for American companies as Canada and Japan combined. The U.S. and the EU are also the largest investors in each other’s markets. Europe is also the United States most important partner in supporting the global trading system.
The launch of the Economic and Monetary Union (EMU) is part of a broader process of enlarging and deepening the European union. EU leaders view the EMU as the next historic step in a long process of European integration and essential to ensuring a global role for Europe in the future. This drive toward a unified European currency has long been on the minds of Europeans, ever since a European commission conceived it in 1957.
Economic strength, stability, and vitality in Europe is in the United States national interests. A strong European economy will benefit U.S. exports and American economic interests in general. Though business will have to deal with certain transitions and changes attendant to the adoption of a single currency. The U.S. has a strong interest in Europe’s futur...
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Barber, Lionel. “The Euro’s Progress.” Europe: Magazine of the European Union, April 2000
European Central Bank. Euro Foreign Exchange Reference Rates. March 14, 2001. Available: http://www.ecb.int/index.html (March 14, 2001)
European Commission. Convergence Criteria for European Monetary Union (EMU). March 25,1998. Available: http://www.bloomberg.com/emu/eurocomm.html (February 26, 2001)
Gros, Daniel. The Euro: Strong economy, weak currency. September 19, 2000. Available: http://www.ceps.be/Commentary/September%2000/gros.htm (February 3, 2001)
Guttman, Robert J. “Governor of the Central Bank of Finland Matti Vanhala: Interview” Europe: Magazine of the European Union, April 2000
President Romano Prodi. President’s Welcome. September 1999. Available: http://www.eurunion.org/infores/euguide/president.htm (February 26, 2001)
Zemanek, H. 2010. Competitiveness within the euro area: the problem that still needs to be solved.Economic Affairs, 30 (3), pp. 42--47.
Kiss, Elinda Fishman. "Chapter 14 Optimum Currency Area: Euro as a Practical Paradigm." Ed. Dilip K. Ghosh and Mohamed Ariff. Global Financial Markets: Issues and Strategies. Westport, CT: Praeger, 2004. N. pag. Print.
The article, “U.S. Economy slows down; Europe is on the Upswing,” shows that Europe will catch up to the United States in no time. According to The New York Times, the unemployment rate for European Union drop from ten percent to 8.7 percent in less than ten years; that is a growth of 2.3 percent. European markets have become more open and competitive and European companies have follow many Americans practices to help deliver better performance. European governments are lowering taxes, at least modestly. Wage increases have slowed to a edge and labor markets have become more flexible, as companies evade traditional job protection rules by hiring part-time and temporary workers.
Walker, Bruce. "Euro Likely to Keep Losing Value." The New American. The New American Magazine, 7 July 2010. Web. 23 May 2011. .
January 1, 1999 marked the beginning of the euro as an accepted currency in eleven European countries. Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain all adopted this single currency, becoming subdivisions of a common monetary policy. On this date, the exchange rates of each of the participating countries were set, and the euro was officially recognized as the legal currency. The push towards the development of a common currency began in 1957, when the Treaty of Rome stated a common European market as an objective, hoping that “an ever closer union among the peoples of Europe” would inevitably occur. The approval of the Single European Act in 1986 symbolized and cleared the way for accelerated European integration and the completion of a single European market. Consequently, European governments and industry began to place greater emphasis on the competitiveness of European industry and on the reduction of barriers within Europe that hindered industry’s global economic competitiveness. The European Union went a step farther in 1992 in the Treaty of European Union, creating the Economic and Monetary Union (EMU).
The European Union has been helped economically ever since World War II. Right after World War II’s end, Europe was struggling to hold on. The countries of the modern-day European Union thought it would be a good idea to come together and help each others struggling economy. To this day, this decision has had a very positive outcome on the EU’s economy. As shown in Diagram 1, the European Union combined together has the world’s highest GDP at 18.3 Trillion USD as compared to the United States’ 17.4 Trillion USD GDP and China’s 10.4 Trillion USD GDP. The idea
Rogoff, Kenneth. "The Euro's PIG-Headed Masters by Kenneth Rogoff." Project Syndicate RSS. Harvard University, 3 June 2011. Web. 21 May 2014.
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
Europe will not run the 21st century because of a combination of economic, institutional, and cultural factors. However, for the purpose of this paper, I will focus on the economic aspects of European society that will impede EU ascendency. I do not believe that the EU will cease to exist in the coming century, but I do believe it will become obsolete because it will be unable to make the necessary changes to their demographic problems, defense policies, and economic culture in response to the increasing American ascendency. Europe has long been known as the continent home to the great powers of the world. From Caesar to Napoleon to the British Empire, the European empires have continuously been at the helm of the ship of progress. The wars of the 20th century however, left Europe in a wake of destruction and chaos period before. The continent was devastated and had little hope to recover. In this new era of European descent, the great American Era came into existence. The US, one of the remaining superpowers, became the helping hand that Europe needed. With the aid allocated by the Marshall Plan and the creation of programs and institutions, Europe had a future. The creation of the European Union (EU) united the European countries over the common goal of preventing war another war. The United States intended for these programs to be a stepping-stone to build the economic and institutional powers of Europe, because a stronger Europe was good for the US. However, instead of using these as a springboard to create self-reliant union, the EU remains reliant on US military and hard power to support them their social efforts.
Therefore, Europe eventually adopted the Stability and Growth Pact to regulate and monitor the fiscal debts of each country (Beetsna and Uhlig 547). However, there are many uncertainties of a unified economic system. Many believe the Stability and Growth Pact does not fit these concerns, and European Commission President Romano Prodi described it as being “stupid” (Savage and Verdun 843). In this paper, the various problems of a unified monetary will be analyzed to show a need for some regulations, while also revealing the short-comings of the Stability and Growth Pact.
The U.S. and the EU have a unique and diverse relationship in this globalized world. Each is willing to disagree on different policies, but is still able and willing to have a thriving economic and diplomatic relationship between each other. Within this relationship, the theory of liberalism is evident throughout with economic interdependence always coming before war.
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]
Padoa-Schioppa, Tommaso. "12 The European Monetary System: A Long-term View." The European Monetary System (1989): 369.
Hübner, Danuta. "EU Cohesion Policy 1988-2008 Investing in Europe's Future." Info Regio 26 (2008): 1-36. Print.
Risse, T 2003, The Euro between national and European identity, Journal of European Public Policy, Vol. 10, no.4, pp.487-505