Monday, 2 January 2012

EURO currency

Advantages & Disadvantages


ADVANTAGES

1) Transaction Costs Will be Eliminated
2) Price Transparency
3) Uncertainty Caused by Exchange Rate Fluctuations Eliminated
4) Single Curency in Single Market Makes Sense
5) Rival to The ''Big Two'': If we look out in the world today we can see strong currencies such as the Japanese Yen an The American $. America and Japan both have strong economies and have milions of inhabitants. A newly found monetary union and a new curreny in Europe could be a rival to the ''BIG TWO''.
6) Prevent War: The EMU is, and will be a political project. It's founding is a step towards European integration, to prevent war.
7) Increased Trade and Reduced Costs to Firms
8) The Political Agenda: There is a political agenda to European bank (the European System of Central Banks - ESCB), the complete removal of national control over monetary policy and the partial removal of control over fiscal policy.
9) Inflation




DISADVANTAGES

1) The Instability of the System
2) Over Estimation of Trade Benefits
3) Loss of Sovereignty
4) Deflationary Tendencies

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