The Euro

Paper Summary:

This paper explains that the introduction and implementation of the euro has done much to integrate the national financial markets, leading to higher efficiency in the allocation of capital in Europe, with EMU members benefiting from an increase in intra-European trade flows and higher capital investment resulting from the development of a single currency. The author points out that a single currency is now an important complement to the Single European Market, which is quickly making the European Union a more powerful player in the global economy. The paper stresses that the single unit of account reduces transaction costs and eliminates a portion of the fixed costs involved in issuing similar securities in multiple currencies, serving to moderate home bias in borrowing and lending, and leading to larger, more-liquid, and more-diversified financial markets.

Table of Contents
Introduction
Objectives
Appropriateness of Analysis
Methodology
Literature Review
Aims of the Euro
How the Euro Has Affected Finland
The Euro and the UK
Discussion and Analysis
The Domestic Dimension
The Regional Dimension
The Global Dimension
Conclusion

From the Paper:

"The common currency will ultimately speed up the integration of the EU countries. With a single currency, a single monetary and interest policy, the countries in the euro zone are more dependent on one another than they ever were. The single currency is slated to become an outward sign of European identity. Thus, national economic policies must remain sufficiently flexible to react to different situations. However, better coordination is necessary to avoid future problems. Europe's increasing power in monetary and financial questions will for also have positive effects on the EU's scope for foreign policy action. A Europe with fewer internal borders and in which people use the same currency from will have a new quality quite different from the Europe of the past."

More papers on The Euro:

• Essay # 90954 : "The Euro Currency Markets"
• Analytical Essay # 130495 : "Impact of the Euro on U.S. Economic and Monetary Policy"
• Essay # 65355 : "Britain's Currency Debate Over the Euro"
• Essay # 36935 : "Introduction of the Euro"

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